Publishe Date: 1:27 PM - 10/28/2017 | Print

Total dawdles on $4.8 billion Iran gas project

Economy - France’s oil and gas major Total is withholding decision on a $4.8 billion development of the world’s largest gas field in Iran, awaiting clarity from the US.

Total was the first Western oil major to sign a deal with Iran to develop and operate phase 11 of Iran’s South Pars in July but the company seems to have hit the brakes on the plan after US President Donald Trump refused to certify Tehran’s nuclear agreement earlier this month.

On Friday, Total’s Chief Financial Officer Patrick de La Chevardiere said the group was proceeding with plans to announce tenders for its Iran South Pars gas project and the main contract would be awarded at the beginning of 2018 when there would be clarity from the US.

The US Congress has two months to make a decision on the fate of the nuclear agreement agreed during former President Barack Obama's administration. Trump has threatened to terminate the pact and if the US Congress agrees, Iran could be placed under renewed sanctions.

On Wednesday, Total Chief Executive Officer Patrick Pouyanne said the company was “committed” to the Iran deal but it was going "step by step" and watching the situation carefully.
He said a US Congress decision on the Iran nuclear deal could clarify Washington’s stance on the international accord.

"We were right to sign the Iran deal and it gave us a clear boost. Having said that, I see what's happening in the US and we have to look at the fact that we are governed by laws and no one knows what Congress will decide," he told the Oil and Money conference in London.

"If the framework changes, if we can legally do and execute the contract we will do that. There are huge opportunities in Iran. But let's see if we can do that initial project first," he added.

According to Iran’s Deputy Minister of Petroleum Amir Hossein Zamaninia, potential US sanctions have little or no effect on future plans in the oil industry.

Zamaninia said Iran was ready for negotiations with oil companies and expected to seal energy contracts worth more than $20 billion over the next year despite the threat of new US sanctions.

In an interview with the Financial Times, the official said the Islamic Republic was negotiating 28 provisional agreements with foreign oil companies.

“Any international oil company that you know, we are negotiating with except the Americans,” the British newspaper quoted him as saying.

He cited Maersk Oil and Rosneft to develop the oil layer in South Pars, and Russia’s Lukoil, Gazprom, and Zarubezhneft to develop Paydar Gharb, Abteymour and Mansouri oil fields.

Trump’s threats of sanctions have put companies in a wait-and-see mode but Zamaninia believes there is “no tangible change in international oil companies’ determination to invest and the speed of their negotiations with Iran.”

However, many Iranians are not convinced and some of them are already expressing their frustration over protracted periods of contracts.

Over the past week, at least one Iranian lawmaker has called for penalties on Total if it fails to execute the contract.

Deputy head of Parliament’s Energy Commission Hedayatollah Khademi touched on a history of failures by the French to honor their contracts in Iran, including by Total.

“About a year has passed since the signing of Iran’s deal with Total but according to the last session which we had with Oil Minister (Bijan Zangeneh), we have not seen anything from Total in Iran yet. It has not even imported the workshop and equipment needed in Iran,” he said.
 

Tags: gas -
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