Iran and Total sign major oil investment deal; Iran's share is 19.9 percent

The National Iranian Oil Company and a consortium led by France's Total signed the first oil contract based on the new contract model for the development of Phase 11 of South Pars. According to the contract, Total and China will hold about 80 percent of the shares, and Iran will hold 19.9 percent of the shares of the South Pars project.

According to IRNA, according to the agreement, which was signed on Monday, July 3, by the CEO of the National Iranian Oil Company and the managers of Total, China National Oil Company, and the Iranian company Petropars, the consortium will invest $4.8 billion in the development of Phase 11 of the South Pars gas field to increase Iran's extraction capacity from this field to 56 million cubic meters.

According to this agreement, the French company Total will own 50.1 percent, China National Petroleum Corporation 30 percent, and Iran's Petropars Company will own 19.9 percent of the shares in the South Pars project.

The South Pars gas field is the world's largest gas resource, located on Iran's southern border in the Persian Gulf and shared with Qatar. The field covers an area of ​​9,700 square kilometers, of which Iran's share is 3,700 square kilometers.

The gas reserves of this part of the field are 14 trillion cubic meters of gas along with 18 billion barrels of gas condensate, which accounts for eight percent of the world's total gas and nearly half of the country's gas reserves.

An important feature of this contract is the planning to build pressure boosting platforms in South Pars for the first time in Iran. These platforms will increase the pressure of gas and oil reserves after the pressure drop caused by extraction to prevent a drop in production.

Gas production is scheduled to begin 40 months after the contract is signed, from two production platforms, and after the pressure drops, pressure boosting platforms will be launched.

ILNA News Agency, publishing details of the contract, wrote that the contract will have a term of twenty years and the repayment of the principal of the second party's direct capital cost will be 10 years.

Possible US government reaction

The United States government, which considers the Iranian government to be a sponsor of terrorism, is strongly opposed to international companies investing in Iran.

Behnam Taleblo, a researcher at the Institute for Defense of Democracies, told VOA about the Trump administration's possible reaction to the Total deal with Iran: "This deal provides a great opportunity for President Trump's administration to use this deal and point out the extent of Total's participation in it to remind European allied governments and their companies of Iran's history of supporting terrorism."

He said Mr. Trump’s administration could also point to Petropars’ bad record and send a message to American partners and Chinese companies that have been in Iran since the early 2000s. “Total left Iran once between 2006 and 2009, so it is appropriate to remind them again of the reasons for this departure,” Mr. Taleblou said.

However, Total's CEO in Tehran has expressed his delight at the company's return to Iran.

Total CEO: The next step is to invest in petrochemicals

Patrick Pouyan, CEO of Total, said at the contract signing ceremony that he was pleased that Total was the first international company to return to Iran after the lifting of sanctions and sign the first contract under the new model of oil contracts.

"I promised the minister that more than 50 percent of the supply of goods for Phase 11 of South Pars will be awarded to Iranian companies. We are also committed to transferring our expertise to Iranian experts," he said.

The Total CEO also emphasized that he is confident that he will travel to Iran to sign other contracts.

He told ISNA news agency that Total's next step in Iran is to be present in the petrochemical sector and the upstream oil sector.

The CEO of Total also met with Iranian President Hassan Rouhani on Monday.

Zanganeh: This contract is a consequence of the JCPOA

At the signing ceremony of this contract, Bijan Zanganeh considered it a consequence of the JCPOA and the recent presidential elections, and said that he hopes that the signing of this contract will usher in a new phase in Iran's oil industry.

Mr. Zanganeh said that according to the five-year plan, $200 billion in capital must be attracted for the oil industry, more than 70 percent of which must be provided from foreign sources. He added: “Iran’s goal is to produce six million barrels of crude oil and gas condensate by the end of the sixth development plan.”

He also said that from the Oil Ministry's perspective, there is no prohibition on the participation of American companies in Iranian oil projects.

Oil officials in the Islamic Republic had previously announced that Iran's oil and gas facilities require billions of dollars in foreign investment for modernization and development. This comes at a time when the continued existence of some non-nuclear US sanctions on foreign exchange transactions has made it difficult to invest in Iran.

On the other hand, the opposition of institutions and figures critical of the government to the new model of oil contracts, which the government had set to encourage foreign investors, delayed the presentation of the model contracts to the Ministry of Oil's customers, but finally the first foreign investment contract based on the new model of oil contracts was signed with Total.

Now the Iranian government hopes to pave the way for other companies to enter by signing contracts like the Total contract.

Source: Voice of America