France's major Total SA and state-held Qatar Petroleum are getting ready to formally launch this week a 25-year joint venture to develop the Al Shaheen oil field in Qatar, Agence France Presse (AFP) reported on Monday, at a time when Qatar is engulfed in one of the worst diplomatic crises with its Arab Gulf neighbors.
Total and Qatar Petroleum will launch this week the North Oil Company, in which the Qatari company will hold 70 percent, and Total will own 30 percent.
Total signed back in in June 2016 the agreement with Qatar Petroleum that gives the French group 30 percent in the 25-year concession of the Al-Shaheen field, which produces 300,000 bpd - around about half of Qatar's total crude oil production. Back then, Total said that the concession deal begins on July 14, 2017.
"This agreement is in line with Total's strategy to reinforce its presence in the Middle East, in particular by accessing giant fields and by complementing its portfolio with low-technical cost oil assets," Patrick Pouyanné, Chairman and CEO of Total, said back then.
But the launch of the joint venture company coincides with the crisis in the Middle East in the dispute between Qatar and several of its neighboring countries led by Saudi Arabia and the UAE.
The start of Total's concession at Al Shaheen also comes just a week after another contract in the increasingly unstable Middle East, when the French energy group signed on 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.
Despite the Qatar-Saudi rift, Pouyanné confirmed to Abu Dhabi-based The National that he would travel to Doha this week for the start of the concession.
"Tensions have risen a notch…and of course, we take into account the sensitivities of our hosts," The National quoted Pouyanné as saying. "But this is exactly the type of situation where Total can serve as a bridge between the countries; we have experience dealing with geopolitical uncertainty."
According to Valentina Kretzschmar, director of corporate research at Wood Mackenzie, as quoted by The National:
"Total seems to be able to transcend the politics of the region because they have this really firm focus on the economics."
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. More