On Monday, Iran signed a $5 billion agreement with France’s Total SA and Chinese oil company, China National Petroleum Corporation (CNPC), to develop the South Pars offshore field, which is one of the largest natural-gas fields in the world. This agreement marks the first energy deal between foreign companies and Iran since Tehran signed the monumental nuclear deal with the U.S and other world powers in July of 2015.
The deal was signed in Tehran and the contract is for 20 years and involves 20 wells and two wellhead platforms. It will also connect two existing facilities by underwater pipelines. There will be a second phase during the development which involves the construction of offshore compression facilities. The end goal of the project is to process 2 billion cubic feet of natural gas each day, which is equal to about 400,000 barrels of oil. Under the terms of the agreement, Total SA will have 50.1% stake in the deal, with CNPC taking 30% and Petropars, a subsidiary of National Iranian Oil Company, taking 19.9%.
In a statement released on Monday, Patrick Pouyanné, the CEO of Total, said: “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.” He added that “Total will develop the project in strict compliance with applicable national and international laws.”
Total had previously worked on the South Pars oil field, but pulled out in 2006 when sanctions were imposed against Iran over the country’s nuclear program. Critics claimed that the nuclear program was being used to produce nuclear weapons, but Iran denies this accusation.
The Obama administration negotiated the limits on uranium enrichment back in 2015 and, in exchange, helped to lift certain sanctions placed against Iran. Donald Trump stated that the agreement was the “worst deal ever,” but in May his administration revived a waiver that upheld key aspects of Obama’s deal. However, the Trump administration has also placed a number of economic sanctions on individuals and businesses that the administration believes to be involved in human-rights abuse or were working with Iran’s ballistic-missile program. Many speculate that this new deal will give both France and China negotiating power to pressure Trump to leave the Iran nuclear deal unharmed.
Hossein Amiri Khamkani, one of the members of Iran’s parliamentary committee on energy, disclosed on Monday that the agreement “breaks the taboo of American sanctions and opens the way for other companies.”
Since the sanctions have been lifted, Iran has signed deals with Boeing (NYSE:$BA) and Airbus (EPA:$AIR) to purchase aircraft. The deal with Boeing marks the first major deal by a United States company since Iran’s revolution in 1979.
Bijan Zanganeh, Iran’s oil minister, announced on Monday that the country will need $200 billion in investments to make up for lost time, and he called for United States companies to make offers
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