Official rejects Total pulling out of Iran project

A senior Iranian energy official has rejected reports that France’s Total had pulled out of an initial deal to develop part of Iran’s giant South Pars gas field. 

Total sealed the $4.8 billion deal in November to develop Phase 11 of South Pars but there are reports that it is having second thoughts amid President Donald Trump’s harsh anti-Iran rhetoric.

Deputy Minister of Petroleum Ali Kardor dismissed those speculations on Monday, saying there is no indication of a "retreat or withdrawal" by the French company.

“Total has already started planning to build the first leg of the platform for Phase 11 of South Pars,” he said, quoted by Mehr news agency.

According to Kardor, a team of negotiators from Total visited Tehran recently to follow up on discussions about contractual and technical issues. 

Total heads a consortium that also includes China National Petroleum Corporation (CNPC) and Iran’s Petropars. Total will control 50.1% of the consortium, with CNPC taking a 30% stake and Petropars 19.9%.

The South Pars field in the Persian Gulf contains some 14 trillion cubic meters of gas, which accounts for eight percent of the world's known reserves.

Besides Total, negotiations have been held with Denmark’s Maersk to develop South Pars’ oil layer, with Russia’s Lukoil to boost oil recovery from Ab Teymour and Mansouri fields and with Germany’s largest oil and gas producer Wintershall to develop four oil fields in western Iran, Kardor said.

"Final agreements with these companies are predicted to be signed soon," he said. 

Warning to Total 

Kardor’s reassuring words came as Minister of Petroleum Bijan Zangeneh warned Total against handing over information about Phase 11 to the Qataris who share South Pars reserves with Iran.

“If they (Total) give our information to the Qataris, they will have to pay heavy damages. However, such a thing is very unlikely to happen,” Zangeneh told Fars news agency on Monday.

Total first signed an agreement back in 2004 to develop Phase 11 and a gas plant at South Pars, but it was never finalized. The company helped develop phases two and three of South Pars, but left Iran when France joined Western sanctions in 2011.

With the lifting of the sanctions, Iran has named 29 major companies from Asia and Europe that have prequalified to bid for oil and gas development contracts in the country where about 70 projects have been defined for implementation.  

First major oil field tender

The National Iranian Oil Company (NIOC) is about to tender development of Azadegan which is the world's third largest oil field with in-place reserves of about 33.2 billion barrels, about 6 billion barrels of which are recoverable.

Kardor, who is also the managing director of NIOC, said China’s Sinopec had announced readiness to participate in the tender.

“While expanding its interaction with reputable European companies, Iran intends to maintain its cooperation with Chinese firms,” he said. “Iran will not forget its friends during difficult times and sanctions. Our relations with China are strategic,” Kardor added.

NIOC terminated a contract with CNPC because the company dragged its feet on developing South Azadegan which Iran shares with Iraq.

CNPC and Sinopec, however, began producing 160,000 barrels per day of oil from two Iranian oil fields last year. North Azadegan, operated by CNPC, came online with 75,000 bpd, with Yadavaran developed by Sinopec adding another 85,000 bpd.

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