• 1 day Shell Oil Trading Head Steps Down After 29 Years
  • 1 day Higher Oil Prices Reduce North American Oil Bankruptcies
  • 2 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 2 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 2 days Venezuela Officially In Default
  • 2 days Iran Prepares To Export LNG To Boost Trade Relations
  • 2 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 2 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 2 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 2 days Rosneft Announces Completion Of World’s Longest Well
  • 3 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 3 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 3 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 3 days Santos Admits It Rejected $7.2B Takeover Bid
  • 3 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 3 days Africa’s Richest Woman Fired From Sonangol
  • 4 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 4 days Russian Hackers Target British Energy Industry
  • 4 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 4 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 4 days Lower Oil Prices Benefit European Refiners
  • 4 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 5 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 5 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 5 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 5 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 5 days OPEC To Recruit New Members To Fight Market Imbalance
  • 5 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 5 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 5 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 5 days GE Considers Selling Baker Hughes Assets
  • 6 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 6 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 6 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 6 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 6 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 8 days The Oil Rig Drilling 10 Miles Under The Sea
  • 8 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 9 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 9 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

The Undisputed Leader Of Tomorrow’s Oil & Gas Markets

According to the Executive Director…

Alt Text

Google Gets There First: Autonomous Cars On The Road

Google’s self-driving car project, Waymo,…

Iran Signs Oil Deal With Total, Deal Done In Euros

Iran Signs Oil Deal With Total, Deal Done In Euros

As Airbus and Peugeot finally return to post-sanctions Iran, the trade-off is Iranian oil, with French Total SA taking the plunge in an agreement to buy up to 200,000 barrels per day of Iranian crude--but the catch is that sales will be in euros.

Deals signed just over a week ago when Iranian President Hassan Rouhani met his French counterpart, Francois Hollande, in Paris included some 20 agreements and a $25-billion accord under which Iran will purchase 73 long-haul and 45 medium-haul Airbus passenger planes to update its ageing fleet. Carmaker Peugeot—which was forced to pull out of Iran in 2012--also agreed to return to the Iranian market in a five-year deal worth $436 million.

In the reverse flow of the new deal, Total has agreed to buy between 150,000 and 200,000 barrels of Iranian crude a day, with company officials also noting that Total would be looking at other opportunities as well in oil, gas, petrochemicals and marketing.

According to Iranian media, Total will start importing 160,000 barrels per day in line with a contract that takes effect already on 16 February. Related: Despite Bold Predictions, T. Boone Pickens Sells All Oil Holdings

Total never really left Iran, though. While it stopped all oil exploration and production activities there in 2010, making it one of the last to withdraw, it still maintained an office there.

Since 1990, Total has been a key investor in Iranian energy, playing a role in the development of Iran's Sirri A&E oil and South Pars gas projects. Sanctions also halted its planned involvement in the LNG project linked to Iran’s South Pars Phase 11.

But Total’s work in Iran hasn’t been without its problems—even without sanctions.

In May 2013, Total agreed to pay $398.2 million to settle U.S. criminal and civil allegations that it paid bribes to win oil and gas contracts in Iran. U.S. authorities claimed that between 1995 and 2004, Total paid about $60 million in bribes to an Iranian government official to win lucrative development rights in three South Pars project oil and gas fields. Related: Despite Huge Losses Oil Companies Reluctant To Shut In Production

While French prosecutors had recommended that Total and its then-CEO, Christophe de Margerie, be tried on these charges, De Margerie’s premature death in a Moscow plane crash put paid to that and the case was discontinued.

At stake here is Iran’s prized South Pars, which holds some 14 trillion cubic meters of natural gas and 18 billion barrels of gas condensates. Or in other words, 7.5 percent of the world’s natural gas and half of Iran’s total reserves.

And Phase 11 of this project is what the supermajors are eyeing. Total was dismissed from Phase 11 in 2009 and its portion of the project was awarded to China National Petroleum Corporation (CNPC), which then pulled out in 2012 under the bite of sanctions. In September 2015, the National Iranian Oil Company (NIOC) transferred the uncompleted portions of Phase 11 to Iranian companies.

Total will likely want back in on this project, and buying Iranian oil surely helps. Related: Tesla Falling Out Of Favor With Investors

And Iran, likewise, is eagerly seeking out European markets, with the Iranian Oil Ministry now saying that it’s crude oil sales to Europe have exceeded 300,000 barrels per day, counting the Total deal.

Iran has recently signed oil contracts not only with French Total, but also with Russian Lukoil’s trading arm, Litasco, and Spanish refiner Cepsa.

The Ministry says that Italian oil giant Eni is interested in buying 100,000 bpd from Iran, and that such a contract will be discussed soon in Tehran.

But there is a catch, as reported by Reuters. Iran is seeking to bill its new crude oil sales in euros in order to reduce dependence on the U.S. dollar, the news agency reported, citing an anonymous NIOC source.

Washington is not going to appreciate this additional threat to the petro dollar. This would add Iran to the growing list of countries that, over the past few years, have begun to pose a challenge to the current system by forming pacts to transact oil in local currencies.

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • R Jensen on February 09 2016 said:
    "Washington is not going to appreciate this additional threat to the petro dollar. This would add Iran to the growing list of countries that, over the past few years, have begun to pose a challenge to the current system by forming pacts to transact oil in local currencies."

    This means that the dollars foreigners were using for trade will begin to come home to roost. The exported inflation will be returned to sender.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News