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France’s oil and gas major Total SA (NYSE:TOT) said on Tuesday that it had signed a preliminary deal to invest billions of dollars in the development of a giant gas field in Iran, becoming the first western major to sign up for investing in Iranian oil and gas since the international sanctions were lifted in January.
Total is leading a consortium to develop phase 11 of the South Pars gas field, expected to have a production capacity of 1.8 billion cubic feet per day, or 370,000 barrels of oil equivalent per day, the French company said, adding that its interest in the project is 50.1 percent, with Iran’s Petropars holding 19.9 percent, and Chinese state-owned oil and gas company CNPC owning the remaining 30 percent.
While Total only announced an estimated total cost for the first phase of the project’s development, which will be some US$2 billion, a second investment phase would follow up, the National Iranian Oil Company (NIOC) said in a statement, adding that the South Pars Phase 11 “would foresee an estimated investment of $6 billion in the project”.
NIOC and the partners will now proceed to exclusive negotiations to finalize a 20-year contract as part of the newly approved Iranian Petroleum Contract (IPC) framework, which is the first such contract between Iran and a Western petroleum company since the sanctions were lifted.
Last month, Iran invited international E&P companies to start pre-qualifying for bidding under the new petroleum contract models approved in September.
Apart from being the first western company to sign a deal for investing in Iran, Total became earlier this year the first European major to resume buying Iranian oil after the sanctions were lifted.
Total, which had worked on developing previous South Pars projects before the sanctions, has been vying to return to that field. In September 2015, the NIOC had transferred the uncompleted portions of Phase 11 to Iranian companies.
Now the French supermajor is returning to developing South Pars, which holds 7.5 percent of the world’s natural gas and half of Iran’s total reserves.
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.