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EghtesadOnline: Iran has made no major concession to French energy giant Total S.A. for developing Phase 11 of the giant South Pars Gas Field in the Persian Gulf, the deputy head of National Iranian Oil Company said.

"The newly-concluded agreement with Total is essentially a long-term service contract and the National Iranian Oil Company has made concerted efforts to strike a win-win deal, which will never grant ownership of domestic hydrocarbon reserves to the energy major," Gholamreza Manouchehri was also quoted as saying by Shana on Sunday.

Denying claims that NIOC reached a compromise with the French energy major to attract the much-needed investment, Manouchehri said, "The new deal, which is within the framework of Iranian Petroleum Contract, is not vastly different from the previous buyback ones, except that it entails a longer period and assigns more responsibilities to contractors."

Highlighting the great potential in Iran's oil industry to attract foreign investments compared to other economic sectors, the official added that based on IPC terms, funding upstream development projects by multinationals is without state guarantees, so they do not add to Central Bank of Iran's foreign debts. According to the official, such mega plans will not generate a return on investment unless the whole project goes on stream that is why no executive body needs to make any financial commitments, according to Financial Tribune.

Pointing to ongoing surveys on the country's oil and gas deposits, Manouchehri said, "International oil giants have proved that Iran's oil output can reach 7 million barrels a day in 10 years, up from the current 3 million bpd. Nonetheless, tapping into the reserves requires investments worth $200 billion, of which $150 billion should be financed by foreigners."

Pointing to the fact that Phase 11 will be developed in two phases, he noted that the French giant does not need to inject all the funding, which will amount to $5 billion, all at once as the second phase begins after the gas reservoir registers a drop in pressure.

  Ample Opportunities

Manouchehri believes that concluding contracts with topnotch firms can positively impact the country's economy in the long run.

"Joining hands with energy majors should not be interpreted as limiting domestic firms' opportunities to play a role in developing oil and gas initiatives," he said, adding that as soon as foreign enterprises embark on expanding hydrocarbon reserves, ample opportunities will emerge for domestic experts to enhance their know-how to comply with international standards. "Not only does cooperation with top companies creates many jobs, but it also paves the way for the return of domestic experts who were without a job when sanctions were imposed," he said.

"Close collaboration with international firms speeds up construction operations, yet it can never overshadow the role of domestic firms as long as their services are more competitive than those of foreign providers."

Asked about the possibility of sanctions snapback and their effect on the deal with Total, Manouchehri said that in case completing the project becomes impossible for the French company, its Chinese partner, China National Petroleum Corporation, will be assigned to finish the plan and if CNPC also cannot cooperate with Iran, the project's Iranian shareholder, Petropars, will implement the project.

"Total and CNPC can scrap the South Pars deal only if they provide NIOC with documents from their respective governments prohibiting them from conducting business with Iran," he said, adding that in that case, they will be paid nothing as based on the terms of the contract, their revenue depends on gas production from Phase 11.


NIOC Total South Pars Gas Field Gholamreza Manouchehri Iran total deal Iran Total Iran Petroleum Deals