Iran signs milestone contract with Total
Iranian officials signed a contract with a Total-led consortium for the development of phase 11 of the super-giant South Pars gasfield on Monday.
The deal marks the first major investment in Iran’s oil and gas industry from a Western IOC since sanctions were lifted in early 2016.
The contract was signed by Iranian Minister of Petroleum Bijan Namdar Zangeneh and Total CEO Patrick Pouyanne at a ceremony in Tehran.
Total has pledged to invest an initial USD 1 billion in the project, which the company estimated in March would require USD 4 billion.
A company spokesman told Reuters on Sunday that the agreement will last 20 years, with gas production beginning in 2021. Once completed, phase 11 will produce 51 mcm (1.8 bcf) per day.
The long-anticipated deal is poised to reshape Iran’s risk profile for foreign investors.
“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,” CEO Patrick Pouyanne said.
Total will own a 50.1% share in the project, while partner China National Petroleum Corporation will hold 30% and National Iranian Oil Company subsidiary Petropars will hold 19.9%.
South Pars is part of the world’s largest gasfield, which straddles the Iran-Qatar maritime boundary. The field is estimated to hold 51 tcm (1,800 tcf) in gas reserves and its development has been planned in 24 geographical areas known as phases.
Phase 11 covers an area of 98 square kilometres. Its development was first planned in 2006 with involvement from Total, but the super-major exited the project in 2008 and CNPC resumed works then halted them in 2010. Development was delayed during sanctions.
The phase is planned for development in two segments. The first involves construction of 30 wells and two wellhead platforms connected with two pipelines to an onshore facility, as well as two 105-kilometre 32-inch pipelines that will transfer gas onshore.
India makes USD 6-bln offer on Iranian gasfield
Another of Iran’s largest gasfields, Farzad-B, edged nearer to an investment decision on Monday as Bloomberg reported that ONGC Videsh had made a USD 6-billion “best offer” on developing the field following months of negotiations.
ONGC said it has pledged a total of USD 11 billion of investments in Iran, with the remaining amount to be directed towards building an LNG facility.
Iranian officials have yet to comment publicly on the offer.
In late June, Iran’s Ministry of Petroleum announced that a basic agreement towards development of the Farzad-B field had been signed with Gazprom.