Page 16 - bne IntelliNews weekly newspaper June 23

Eurasia
June 23, 2017 www.intellinews.com I Page 16
Total resolves to “risk” $1bn on Iran’s South Pars, part of world’s biggest gas field
bne IntelliNews
French oil major Total expects to sign a contract with Iran to develop part of the world’s biggest natural gas field within a few weeks, company CEO Patrick Pouyanne told Euronews television on June 20.
The deal on the Iranian part of the South Pars field – part of a giant gas reservoir which
is shared with Qatar in the Persian Gulf –
is expected to have an initial investment value of $1bn and would represent the Islamic Republic’s first investment by an international oil company since nuclear sanctions were dropped at the start of last year.
Total, however, is conscious that its investment could be imperilled if the US Trump administra- tion decides to row back on sanctions waivers it has granted Iran, should a hostile Washington decide, for instance, that it wishes to penalise the Islamic Republic for its ballistic missile program. “The US waivers have been renewed and they will be renewed every six to eight months. We have to live with some uncertainty,” Pouyanne told Reu- ters on June 20.
“It is worth taking the risk at $1bn because it opens a huge market. We are perfectly conscious of some risks. We have taken into account [sanc- tions] snapbacks, we have to take into account regulation changes,” he added.
Onshore South Pars production facilities at Asaluyeh, Bushehr Province, Iran.
Total holds a 50.1% interest in the South Pars 11 project while state-owned China National Petroleum Corporation owns 30% and Iran's Petropars 19.9%.
Total worked on phases 2 and 3 of South Pars in the 1990s and was one of the biggest international investors in Iran before it was forced to pull out by the sanctions brought in to deter Iran from devel- oping a nuclear program that the major powers said was aimed at producing nuclear weapons.
Total’s investment will be conducted under Iran’s new Iranian Petroleum Contract (IPC). It differs from its predecessor by offering the operator remuneration based on production rather than
a simple percentage of development costs.
In all, the development of phase 11 of South Pars could have a value of $4.8bn, according to the National Iranian Oil Company.
Iran has the world’s second biggest gas reserves and third biggest oil reserves. It is seeking to attract companies including Total, Royal Dutch Shell, Lukoil and Gazprom Neft to develop its oil and gas fields with new technology that will push up energy output rates.