Picture: REUTERS
Picture: REUTERS

Tehran — Iran plans to sign a formal contract with Total and China National Petroleum on Monday to develop its share of the world’s biggest natural gas field — the first investment in the country by an international energy company since sanctions were eased in 2016.

Total CEO Patrick Pouyanne would be in Tehran for the signing of the formal agreement, Parastoo Younchi, the Iranian oil ministry official in charge of foreign media relations, said.

Total and China National Petroleum signed a "heads of agreement" with National Iranian Oil in November 2016 to develop phase two of the South Pars gas field, a deal that was valued then at $4.8bn. Under the preliminary accord, Total will control 50.1% of the project. China National Petroleum will have a 30% interest and Iran’s Petropars 19.9%.

Iran holds the world’s biggest gas reserves, estimated by BP at 33-trillion cubic metres, and is the third-biggest oil producer in the Organisation of the Petroleum Exporting Countries.

The producer is wooing companies such as Total, Royal Dutch Shell and Russia’s Lukoil to invest in its oil and gas fields to boost output. Its oil production climbed 33% in 2016 after sanctions related to its nuclear programme were eased in January 2016, according to data compiled by Bloomberg.

In November, Total put the cost of the first part of the South Pars project at $2bn, with Total’s share at $1bn. The Paris-based company was working on South Pars until sanctions forced it to withdraw in 2009.

The offshore field is Iran’s section of the world’s biggest deposit, also shared with Qatar. China National Petroleum has been present in Iran since 2004, operating in oil, gas and oil field services, according to the company’s website. In 2006, it was awarded a three-year contract to provide offshore well-logging and other services at South Pars.

Bloomberg

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