Total Could Lose Big If It Pulls Out Of South Pars Deal

Iran says Total could lose all of its investment if it pulls out of a deal it made with Tehran regarding the development of the South Pars gas field.

"If Total, without the enforcement of (U.N.) Security Council sanctions, announces that it has the intention to leave the contract, no capital will be returned to this company and no sum will be transferred to the company," oil minister Bijan Zanganeh said to SHANA, the oil industry's press service.

Back in July, Total inked a deal to develop phase 11 of the South Pars field, with an initial payment of $1 billion to get the ball rolling. The agreement was the first made by a Western energy company in Iran since the United Nations lifted sanctions against Iran that were levied due to distrust regarding a rogue nuclear program.

Total has the "willingness to move forward" with its previous deal, the company said in a statement.

"Total is currently working on the South Pars 11 project and is committed to pursuing it. Tenders have already been launched and contacts should be awarded by January," a Total spokesman said, according to Reuters.

Iran's ambitions in the LNG area are not new. There were plans to develop LNG production projects in the early 2000s. Western sanctions interrupted these plans, but now they are back on the table, unless the U.S. imposes new sanctions on the country, which is always a possibility under the current administration. Until that happens-if it ever does-Iran has access to Western oil and gas extraction technology, and has a relationship with Total, among others. The French company has also previously expressed interest in acquiring other natural gas projects around Iran as the country reenters the international arena. 

By Zainab Calcuttawala for Oilprice.com

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