Total breaks into Iranian energy market with estimated US$4.8bn contract

News | 10 July 2017


A consortium led by Total has signed a contract for the development of Phase 11 of the South Pars (SP11) gas field with the National Iranian Oil Company (NOIC).  

The deal was valued at US4.8bn when it was initially struck in November 2016, but was delayed to ensure it did not violate US sanctions.

It becomes the first significant energy contract to be signed between a European energy company and Iran, following the lifting of sanctions with the Joint Comprehensive Plan of Action (JCPOA).

“This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country,” said Patrick Pouyanné, chairman and CEO of Total. 

“We are proud and honoured to be the first international company to sign an IPC [Iran Petroleum Contract], which offers an attractive commercial framework, following the 2015 international nuclear accord (JCPOA) and to therefore contribute to the development of relations between Europe and Iran.”

South Pars is the largest gas field in the world and is shared by Iran and Qatar.

Total is the operator of the SP11 project with a 50.1% interest, alongside the Chinese state-owned oil and gas company CNPC (30%), and Petropars (19.9%), a wholly owned subsidiary of NIOC.

The contract is valid for 20 years. Total expects to begin awarding contracts to develop the first phase of the project (estimated to cost US$2bn) by the end of 2017.

Pouyanné added, “Total will develop the project in strict compliance with applicable national and international laws. This project is in line with the group’s strategy to expand its presence in the Middle East and grow its gas portfolio by adding low cost, long plateau assets.”

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