Published: Tue, July 04, 2017
Economy | By Melissa Porter

Total signs Iran's 1st global energy deal since sanctions eased

Total signs Iran's 1st global energy deal since sanctions eased

Iran signed a new contract to develop its giant South Pars gas field with France's Total (TOTF.PA) and China National Petroleum Corporation (CNPC) on Monday, state media reported.

The contract, worth close to $5bn (£3.8bn), is the biggest foreign deal since sanctions against Tehran were lifted in 2016.

Iran is expected to sign a deal with French energy giant Total to develop an offshore gas field in the Gulf, the BBC reports.

Monday's deal will be the culmination of months of negotiations after Total signed a preliminary $US4.8 billion agreement to develop the giant gas deposit alongside its partners late past year. And some Western companies have been reluctant to jump in since Iran still faces sanctions that prevent firms from transacting with Iran in US dollars.

As part of the agreed 20-year project at South Pars, the offshore field will receive 30 new wells and two well-head platforms, with Total pledging to invest an initial $1bn for the first stage of the project.

Energy business is politically fraught in Iran where the country needs global business as a way to develop its resources but see gas and oil as an important national asset that should not be handed over to foreigners.

The aim is to start pumping into Iran's domestic grid in 2021, eventually reaching above 56 million cubic meters (around 2 billion cubic feet) of gas per day.

With 21 Tcf of gas in place, Wood Mackenzie estimates Phase 11 could recover more than 10 Tcf of sweetened gas and 450 MMbbl of condensate.

Iran will sign a multi-billion dollar natural gas contract with France's Total and China's CNPC on Monday, amid extended sanctions relief aimed toward the Islamic Republic.

The 20-year contract also offers a vote of confidence for Iran in the business world, especially as U.S. president Donald Trump has threatened to try and renegotiate the nuclear accord. It is the world's largest gas field shared between Iran and Qatar.

CNPC will own 30 percent and Petropars 19.9 percent.

Reportedly, with United States sanctions still in place prohibiting trading with Iran in dollars, Total will finance the project in euros from its own resources.

Iran has significantly ramped up its energy production since the sanctions were relaxed. Iran hopes to produce 6 million barrels of crude oil and condensates a day in five years, he said, up from some 3.6 million today.

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