Total signed a contract with Iran for 4.8 billion. Dollars to develop a large gas field “South Pars.” The consortium, in which Total holds 50.1 percent, China’s state-run China National Petroleum Corporation (CNPC) also participates with 30 percent and Petropars, a subsidiary of the state-run National Iranian Oil Company, with 19.9 percent.
In response to the announcement Wood Mackenzie analyst Homayoun Falakshahi said “This is the one that everyone has been waiting for. This deal very much sets the example.”
Patrick Pouyanné, the chairman and chief executive of the French energy giant Total, sees a strong opportunity for investment after turbulence in the Middle East.
“What the Middle East can offer us is having giant resources at a low cost,” he said. “You can have a profitable business. This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country,” Total’s CEO, Patrick Pouyanné, said in a statement Monday. “Total will develop the project in strict compliance with applicable national and international laws.”
Agreement on the 11th section of “South Pars” was signed in the presence of Iranian oil minister Bijan Zanganeh. At the ceremony, the Minister congratulated all parties to the transaction, noting that it will lead to “more than $5 billion foreign investment.”
The project will have a production capacity of 2 billion cubic feet per day, or 400,000 barrels of oil equivalent per day, according to Total. Get gas will begin to offer the Iranian domestic market since 2021.
The deal, agreed last year, marks the first investment of an international energy company in Iran since the sanctions were lifted. Iran has one of the largest gas reserves in the world and is trying to attract companies to invest and increase yield.
“Total’s decision to sign the South Pars 11 contract is a cautiously positive sign for foreign investment in Iran’s upstream. Currently Iran’s oil production has flat-lined and each new delay to the return of foreign investors pushes back the timeline for further growth in output,” Richard Mallinson, geopolitical analyst at Energy Aspects, told media via email on Monday.
