The deal signed between Iran and France’s Total company on the phase 11 of development of Iran’s South Pars gas field will give confidence to other European companies that have been considering investments since the 2015 deal on Iran’s nuclear program, William Arthurs, chairman of the London-based Transatlantic Institute, told Trend.
“Total has had a long-term interest in Iran’s energy sector, including proposals for the South Pars field, though it held back on further investment while the sanctions regime was in place, while continuing to supply petrol to Iran,” he said. “This deal is beneficial for security in the region, while Iran looks to secure further investment.”
Arthurs pointed out that widening the diversity of supply will help European and global market stability and energy security.
“A more competitive market will ensure that the long-term trend in energy resource prices is downwards, benefiting industry and domestic consumers, while new investment in energy sector technology will enhance profitability in the sector, even if prices fall,” he added.
The structure of this deal ensures that France and China (two of the other six participants in the 2015 Iran nuclear deal) will have an interest in keeping the 2015 deal largely in place, whatever specific sanctions the US may plan, according to Arthurs.
Total and the National Iranian Oil Company (NIOC) have signed a contract for the development and production of phase 11 of South Pars, the world’s largest gas field.
The project will have a production capacity of 2 billion cubic feet per day or 400,000 barrels of oil equivalent per day including condensate. The produced gas will supply the Iranian domestic market starting in 2021.
This contract, which has a 20-year duration, is the first Iranian Petroleum Contract (IPC) and is based on the technical, contractual and commercial terms as per the Heads of Agreement (HoA) signed on November 8, 2016.
Total is the operator of the SP11 project with a 50.1 percent interest alongside the Chinese state-owned oil and gas company CNPC (30 percent), and Petropars (19.9 percent), a wholly owned subsidiary of NIOC.
The South Pars Phase 11 will be developed in two phases. The first phase, with an estimated cost of around $2 billion equivalent, will consist of 30 wells and 2 wellhead platforms connected to existing onshore treatment facilities by 2 subsea pipelines.
At a later stage, once required by reservoir conditions, a second phase will be launched involving the construction of offshore compression facilities.