France’s Total has signed a contract with National Iranian Oil Company (NIOC) to develop phase 11 of the South Pars (SP11) field, the world’s largest gas field.

MEED reported on 2 July that the estimated $4.85bn contract was due to be finalised on 3 July. Total confirmed on 3 July that the deal had been signed.

The contract, which has a 20-year duration, is the first new Iranian Petroleum Contract to be signed and is based on the technical, contractual and commercial terms as per the heads of agreement (HoA) signed on 8 November 2016.

The project will have a production capacity of 2 billion cubic feet a day, or 400,000 barrels of oil equivalent per day including condensate. The first gas from the project will start supplying the Iranian market in 2021.

Total will be the primary operator of the SP11 project with a 50.1 per cent interest in the scheme, with China’s CNPC holding a 30 per cent interest and Petropars, a wholly owned subsidiary of NIOC, holding the remaining 19.9 per cent.

SP11 will be developed in two phases, with the estimated $2bn first phase to consist of 30 wells and 2 wellhead platforms connected to existing onshore treatment facilities by 2 subsea pipelines.

At a later date, a second phase will be launched. This will involve the construction of offshore compression facilities, a first on the South Pars field.

Since the signing of the HoA last year, Total has been conducting engineering studies on behalf of the consortium and has initiated calls for tender in order to award the contracts required to develop the project by the end of the year.

The South Pars field development is the most important energy project in Iran, both in terms of size and the strategic value to the country. The offshore field accounts for 40 per cent of Iran’s gas reserves and more than 40 per cent of the country’s total gas production.

The field was discovered in 1990 and is located about 100 kilometres off the Iranian coast. The asset, which spans Iranian and Qatari borders, is in 65 metres of water and located 3,000 metres below the seabed.

The total field covers an area of 9,700 square kilometres, with 3,700 sq km located in Iran, and the remaining 6,000 sq km located in Qatar’s territorial waters.