Iran to refund Total after gas project start up

11 September 2018
Total is not liable for a penalty to Iran for quitting the South Pars phase 11 project

Iran will reimburse French energy major Total for its investment in phase 11 of the South Pars natural gas field (SP11), but not until phase 11 of the multibillion-dollar project becomes operational, Iranian Oil Minister Bijan Zanganeh has been quoted by media reports as saying.

Total in July announced it was quitting the South Pars phase 11 (SP11) asset after failing to obtain a waiver from the US from economic sanctions imposed on Tehran. The waiver would have allowed the company to continue its operations in the Islamic Republic.

Total signed a contract in 2017 to develop phase 11 of the field with an initial investment of $1bn.

“Total is not supposed to pay a sum as a penalty to Iran, but the money that this company has invested in phase 11 of South Pars until now will not be reimbursed until the time of operation and production,” Zanganeh was quoted as saying by Shana, the Oil Ministry’s official news site.

When Total said it would pull out of the project unless it secured a sanctions waiver, the company’s CEO Patrick Pouyanné said it had so far spent about $46m on the project, and withdrawing would not impact its production growth targets.

China’s state-owned energy firm China National Petroleum Corporation (CNPC), the second largest shareholder in SP11, has recently taken over Total’s stake in the offshore gas project.

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