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China National Petroleum Corporation (CNPC) is mulling the taking over of the majority stake in an Iranian gas project from Total if the French company walks out of Iran to comply with possible new U.S. sanctions, Reuters reported on Friday, citing industry sources.
In July this year Total signed a contract to develop phase 11 of the South Pars gas field in Iran—the world’s biggest gas field—marking the first Iranian Petroleum Contract (IPC) with a Western major since most sanctions on Iran were lifted. Total holds a 50.1-percent interest and is the operator of the South Pars 11 (SP11) project, while CNPC has 30 percent, and Petropars, a wholly owned subsidiary of the National Iranian Oil Company (NIOC), owns the remaining 19.9 percent.
However, after U.S. President did not certify in October that Iran was complying with the terms of the nuclear deal, now the U.S. Congress has to vote if new sanctions on Iran should be imposed.
It is not clear yet what sanctions could be imposed, but they could ban companies operating in Iran from doing business in the U.S., according to Reuters. In that case, Total would comply and would leave Iran if it is not able to operate in Iran under possible new sanctions.
“We have signed a contract in Iran. If we can move forward, we’ll move forward. If we cannot, we will have to stop. That’s life,” Total’s CEO Patrick Pouyanne was quoted as saying in October.
Related: Gas Shortage Has China Backtracking On Coal Ban
According to a senior Beijing-based source with knowledge of the South Pars 11 deal who spoke to Reuters, CNPC could take over Total’s interest and become operator of the project if the French company is forced to leave Iran.
Officials at CNPC have recently held internal talks to discuss the implications of taking control of the project, three industry sources told Reuters.
Possible changes in project ownership are expected to delay the timetable of South Pars 11 because Total has already started talks with service companies and is expected to award contracts in early 2018, Reuters’ sources say.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.