Total to struggle to finalise deal with Iran on South Pars

13 May 2008
France’s Total admitted it may be difficult to reach a deal with Iran over its investment in the South Pars gas field due to ongoing political wrangles but says it remains hopeful of agreeing on a deal in the longer-term.

It follows the decision by the UK/Dutch Shell Group on 11 May to cancel its involvement in another phase of the project due to sanctions pressure from the US, which remains concerned about Tehran’s nuclear ambitions.

Total’s chief executive officer Christophe De Margerie said it had yet to discuss the details of any contract with the client, National Iranian Oil Company, partly due to cost inflation in the energy sector and political pressure.

“In the short term, it will be difficult to find a win-win situation [but] we have told them we are interested in the long term,” said De Margerie on the sidelines of an energy ceremony in Doha on 12 May.

Total is considering developing a $10bn liquefied natural gas (LNG) project using feedstock from phase 11 of the South Pars field.

A Total executive said last month that no deal can be signed considering the current US-led sanctions against Tehran (MEED 18:4:08).

"We have to recognise that it would be inappropriate to commit billions of dollars of investment today until Iran joins the international community," said the executive.

Shell formally announced it was quitting phase 13 of the project but said it was considering developing phases 20 and 21 at a later date.

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