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France’s energy giant Total will commit US$1 billion to the development of the South Pars offshore gas field in Iran, after the U.S. extended a sanction waiver. In an interview with Reuters, CEO Patrick Pouyanne said that “The U.S. waivers have been renewed and they will be renewed every six to eight months. We have to live with some uncertainty.”
Total took part in the initial development of South Pars back in the 1990s, but was forced out of the country when international sanctions were imposed on Tehran on suspicions it is developing nuclear weapons. Now the company is back for the Phase 11 of the field’s development, estimated to cost some US$5 billion. It has a 50.1-percent stake in the field, partnering with China’s CNPC with 30 percent, and Petropars, which holds the remainder.
The company expects to benefit from the new Iranian Petroleum Contract, promoted by Tehran as a major improvement on the old production-sharing scheme that greatly limited foreign operators’ returns on investments made in the country’s mineral resources. In all, Total is aiming for a minimum of 15 percent in returns on new investments globally. The new contract it inked with the Iranian government for South Pars offers much better conditions, Pouyanne said.
The South Pars field, which Iran shares with Qatar, which calls it the North field, holds an estimated 14 trillion cu m of natural gas in the Iranian section, and 18 billion barrels of gas condensates. This, according to Pars Oil and Gas Company, represents 7.5 percent of the world’s gas reserves and half of Iran’s.
Meanwhile, another Western energy company, Italy’s Eni, signed a preliminary contract with the National Iranian Oil Company, under which it will carry out feasibility studies at two fields, Kish and Darquain. It will also solicit partners for the two fields’ development both in Iran and abroad.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.