Tehran’s first major energy contract with a European oil company in more than a decade
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consortium led by France’s Total is set to sign a multi-billion-dollar gas deal with Iran, the Islamic republic’s first major energy contract with a European oil company in more than a decade as transatlantic differences over relations with the country deepen.
The deal — which a Total spokesman said was “a major contract which would contribute to the development of relations between Europe and Iran” — comes less than a month after the US Senate approved sweeping new sanctions against Tehran.
The signing ceremony is due to take place in Tehran on Monday. Total said it was “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” between Iran and six major powers, including the US.
The energy company added that the project would be “in strict compliance with applicable national and international laws”.
The provisional agreement to develop part of South Pars — the world’s largest gasfield shared between Iran and Qatar — was struck between the Total-led consortium and the National Iranian Oil Company, a state-owned energy group, in November last year. At the time the value of the project was estimated at $4.8bn. The final contract was slightly delayed to ensure it did not violate US sanctions against Iran.
But since then, Washington and Europe have become increasingly at odds over Iran policy, as President Donald Trump has sought to break with the legacy of his predecessor Barack Obama..
Mr Trump has so far not followed up his campaign pledge to “dismantle” the 2015 nuclear agreement which led to the lifting of nuclear-related sanctions in return for massive restrictions on Iran’s nuclear activities.
But his administration has imposed new sanctions in response to the country’s missile programme, while the Senate bill would widen such sanctions as well as imposing terrorism related sanctions on Iran’s Revolutionary Guard and further human-rights related sanctions on Iranian individuals.
Saeed Laylaz, a reform-minded Iranian analyst, said the Total contract showed “that the US’s new policies are either rhetoric or have failed.” He added: “This is more evidence that the nuclear agreement is irreversible and is respected by all sides while no side has any intention to breach it.”
Iran has the world’s second-largest gas reserves and fourth-largest oil reserves, according to the US Energy Information Administration, but needs $200bn of investment to revive its antiquated energy sector over the next five years.
As well as the US non-nuclear sanctions which have dissuaded top western banks from Iran-related activity for fear of US penalties, the power struggle in Iran has made deals with western companies highly sensitive.
The government of Iran’s pragmatic president Hassan Rouhani who was re-elected in a landslide in May faces fierce resistance from the defeated hardliners.
The Revolutionary Guard, which has developed business interests over the past two decades partly thanks to the country’s isolation is battling against the president’s efforts to open up to foreign investment. Mr Rouhani recently said the business activities of the 120,000 strong military force had turned it into “a government with a gun,” which “scared” the private sector.
Technocrats in Mr Rouhani’s government hope the Total deal could pave the way for other international companies to follow suit. Royal Dutch Shell and Italy’s Eni have already signed provisional agreements to help develop other parts of Iran’s most lucrative sector.
Total has a 50.01 per cent stake in the new project and will be joined by China’s CNPC with 30 per cent while Iran’s Petropars takes the remainder. Total said the gas would supply the Iranian domestic market starting in 2021 and that the French group would make an initial $1bn investment in the project.
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Tehran’s first major energy contract with a European oil company in more than a decade
A
consortium led by France’s Total is set to sign a multi-billion-dollar gas deal with Iran, the Islamic republic’s first major energy contract with a European oil company in more than a decade as transatlantic differences over relations with the country deepen.
The deal — which a Total spokesman said was “a major contract which would contribute to the development of relations between Europe and Iran” — comes less than a month after the US Senate approved sweeping new sanctions against Tehran.
The signing ceremony is due to take place in Tehran on Monday. Total said it was “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” between Iran and six major powers, including the US.
The energy company added that the project would be “in strict compliance with applicable national and international laws”.
The provisional agreement to develop part of South Pars — the world’s largest gasfield shared between Iran and Qatar — was struck between the Total-led consortium and the National Iranian Oil Company, a state-owned energy group, in November last year. At the time the value of the project was estimated at $4.8bn. The final contract was slightly delayed to ensure it did not violate US sanctions against Iran.
But since then, Washington and Europe have become increasingly at odds over Iran policy, as President Donald Trump has sought to break with the legacy of his predecessor Barack Obama..
Mr Trump has so far not followed up his campaign pledge to “dismantle” the 2015 nuclear agreement which led to the lifting of nuclear-related sanctions in return for massive restrictions on Iran’s nuclear activities.
But his administration has imposed new sanctions in response to the country’s missile programme, while the Senate bill would widen such sanctions as well as imposing terrorism related sanctions on Iran’s Revolutionary Guard and further human-rights related sanctions on Iranian individuals.
Saeed Laylaz, a reform-minded Iranian analyst, said the Total contract showed “that the US’s new policies are either rhetoric or have failed.” He added: “This is more evidence that the nuclear agreement is irreversible and is respected by all sides while no side has any intention to breach it.”
Iran has the world’s second-largest gas reserves and fourth-largest oil reserves, according to the US Energy Information Administration, but needs $200bn of investment to revive its antiquated energy sector over the next five years.
As well as the US non-nuclear sanctions which have dissuaded top western banks from Iran-related activity for fear of US penalties, the power struggle in Iran has made deals with western companies highly sensitive.
The government of Iran’s pragmatic president Hassan Rouhani who was re-elected in a landslide in May faces fierce resistance from the defeated hardliners.
The Revolutionary Guard, which has developed business interests over the past two decades partly thanks to the country’s isolation is battling against the president’s efforts to open up to foreign investment. Mr Rouhani recently said the business activities of the 120,000 strong military force had turned it into “a government with a gun,” which “scared” the private sector.
Technocrats in Mr Rouhani’s government hope the Total deal could pave the way for other international companies to follow suit. Royal Dutch Shell and Italy’s Eni have already signed provisional agreements to help develop other parts of Iran’s most lucrative sector.
Total has a 50.01 per cent stake in the new project and will be joined by China’s CNPC with 30 per cent while Iran’s Petropars takes the remainder. Total said the gas would supply the Iranian domestic market starting in 2021 and that the French group would make an initial $1bn investment in the project.
