French and Chinese energy giants signed a $4.8 billion-dollar deal with Iran on Monday to develop the South Pars offshore gas field in the Persian Gulf.
The French multinational energy company Total, the state-owned oil-gas corporation China National Petroleum Corporation and National Iranian Oil Company (NIOC) signed a contract for development of the 11th phase of the South Pars gas field. Total will operate the 11th phase of the gas field with a 50.1% interest, while the Iranian Petropars Company will have a share of 19.9% and the Chinese CNPC 30%, according to Iran’s IRNA news agency.
“$2.4 billion foreign capital will be invested in the first level of the development contract. The contract will be valid for a 20-year period, during which 335 billion cubic meters of rich gas will be extracted from the 11th phase of South Pars gas field,” the managing director of NIOC Ali Kardor said during the signing ceremony on July 3.
The combined value of all gas produced from the field will amount to $23 billion, according to Kardor.
In November 2016, Total signed a preliminary gas agreement with Iran to develop the South Pars gas field, but it had been looking to the United States for its authorization to finalize the deal, as Iran remains subject to American sanctions that restrict global capital and access to Iran’s markets.
Total inked its first deal with Iran in 1995, where it was committed to the development of the second and third phases of South Pars. In 2009, Total signed another contract with Iran to develop phase 11, but was forced to abandon its projects in Iran in 2012 when a series of US-led sanctions barred international oil and gas companies from investing in Iran.
In a meeting with Total Chief Executive Officer Patrick Pouyanne on Monday, Iranian President Hassan Rouhani described the deal as a “positive” step towards enhancing bilateral economic and technological cooperation, and said that the current government has always tried to pave the way to promote economic collaboration with major companies within the framework of the Joint Comprehensive Plan of Action (JCPOA), otherwise known as “the nuclear agreement.”
Rouhani also invited large foreign companies to invest in projects in Iran’s oil and gas sectors, valued at around $200 billion.
In July 2015, Iran and the five permanent members of the UN Security Council plus Germany signed the JCPOA, according to which Iran would curb its nuclear program in exchange for the lifting of specific sanctions.
The South Pars field, considered the world's largest natural gas field and shared between Persian Gulf neighbors Iran and Qatar, holds an estimated 51 trillion cubic meters of in-situ natural gas and 50 billion barrels of natural gas condensate.
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