Total and Iran Sign $4.8 Billion Contract for South Pars Development

The French giant Total and Iran signed a 20-year contract for the development of Phase 11 of the South Pars gas field on Monday, July 3. Total will be the operator of the project with a 50.1% stake, while China's CNPC and Iran's Petropars will hold 30% and 19.9% stakes, respectively, as part of the consortium for Phase 11 development. This is the first contract signed under Iran's new oil contract model known as IPC with foreign companies. According to an official report from Total published on its website, Patrick Pouyanné, the CEO of Total, stated after signing the agreement that this significant contract opens a new chapter for the company's return to Iran, and Total is proud to be the first company to sign an IPC contract with Iran. The Iranian Ministry of Oil also announced that the contract aims to produce 56 million cubic meters of gas and 80,000 barrels of gas condensate daily, to be executed in two phases. The first phase includes a $2 billion investment for drilling 30 wells, laying 270 kilometers of pipeline, constructing two gas production platforms, and a floating buoy for loading gas condensate onto ships. This phase will be completed in 40 months, with Total covering half of the costs. After three years of gas production, the South Pars field is expected to experience pressure drop in 2023, at which point pressure boosting platforms will be launched. The new platform, weighing 20,000 tons and equipped with massive compressors, will be ten times larger than the current platforms in South Pars, with construction costs estimated at $2.5 billion, ready in the second phase, which is 60 months after the contract execution. Bijan Namdar Zangeneh, Iran's Minister of Oil, stated at the signing ceremony that the contract with Total is a 'result of the JCPOA and elections' and that there are no barriers for American companies to participate in Iran's oil projects. According to the state news agency IRNA, the Minister expressed hope that signing the Phase 11 contract would pave the way for other contracts and foreign company participation. Zangeneh mentioned that Iran's energy projects will require $200 billion in investment over the next five years. In the fall of 2015, Iran introduced new oil and gas contracts to foreign companies, identifying 49 oil and gas fields for development. However, reports from some media indicate that internal opposition, particularly from hardliners, has delayed the implementation of IPC until now.