France’s Total signs $4.8 billion natural gas project with Iran

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Radio Free Europe / Radio Liberty

The French energy firm Total says it has signed a multibillion-dollar agreement with Iran on the development of an Iranian offshore natural-gas field — the first major Western energy investment since international sanctions were lifted against Tehran under its nuclear accord with world powers.

The agreement on developing the South Pars offshore gas field also is Iran’s largest business deal with foreign partners since international sanctions against Tehran were eased in 2016.

Total’s Chief Executive Officer Patrick Pouyanne, left, with Iranian President Hassan Rouhani in January 2016. / AFP

Total’s Chief Executive Officer Patrick Pouyanne and Iranian Oil Minister Bijan Namadar Zanganeh signed the 20-year deal in the presence of managers of the China National Petroleum Corporation and the Iranian firm Petropars.

“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,” Pouyanne said in a statement after the signing.

Pouyanne was scheduled to meet with Iranian President Hassan Rohani after the signing.

Total signed a preliminary deal with Iran in November, acquiring a 50.1 percent stake in the $4.8 billion project.

The deal includes 30 natural gas wells and two production units.

The China National Petroleum Corporation owns 30 percent and Petropars controls a 19.9 percent stake.

The offshore field — the largest natural gas field in the world — was first developed in the 1990s, when Total was one of the largest investors in Iran.

But Total effectively left Iran in 2012 when France joined European Union partners in imposing sanctions over suspicions that Tehran was trying to develop nuclear weapons.

Total said it plans to invest an initial $2 billion for the first stage of the 20-year project.

The Petropars development deal was initially meant to be signed early in 2017, but Total said in February that it would wait to see whether the U.S. President Donald Trump’s administration would reimpose sanctions on Iran.

Trump had threatened during his 2016 presidential election campaign to cancel the nuclear accord between Iran and six world powers that came into force in January 2016.

Trump’s administration has taken a tough line on Iran and imposed new U.S. sanctions related to its ballistic-missile program and military actions in the region.

But the White House has kept the nuclear agreement alive, continuing to waive the relevant sanctions every few months as required under the agreement.