Chinese yet to decide on investment in Iran’s South Pars gas field

14 May 2018
State-owned China National Petroleum Corporation could take over Total’s stake in the megaproject

State-owned China National Petroleum Corporation (CNPC) is yet to decide on whether it will take over Total’s stake in the project to develop phase 11 of Iran’s South Pars offshore gas field, according to the company’s chairman Wang Yilin.

Total signed the $1bn deal to develop the South Pars gas field in July last year in the first major Western energy investment in the Islamic Republic since international sanctions, including most of those imposed by the US, were lifted as part of a landmark agreement in 2015 over Iran’s nuclear programme. US President Donald Trump withdrew from the Iran nuclear agreement on 8 May.

Under the terms of the deal Total had a 50.1 per cent stake in the project, CNPC had a 30 per cent stake, and Iran’s Petropars, a NIOC subsidiary, had a 19.9 per cent stake.

The deal also gave CNPC the option to take over Total’s stake if it pulled out, according to a Reuters report that cited anonymous sources.

Speaking in Abu Dhabi CNPC’s chairman said the company is still considering whether to use this option and did not confirm reports that his organisation, which already operates two oil fields in Iran, has spent about $20m on planning to develop the field.

“We have not made a decision [on Iran] yet,” Wang told the Dubai-based English language daily Gulf News.

The South Pars gas reservoirs are buried beneath the seafloor, 70 meters underwater.

Prior to Trump’s decision to reinstate US sanctions Total had said that the project would have a production capacity of 2 billion cubic feet a-day, or 400,000 barrels of oil equivalent per day, including condensate.

At current market prices, the whole reserves of the field, which Iran shares with Qatar, would be worth around $2.9 trillion.

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