Total close to finalising $1bn South Pars deal despite new sanctions threat

03/07/2017

South ParsThe French oil major Total is finalising plans to invest an initial $1bn in the development of phase 11 of the huge South Pars gas field (SP11) in southern Iran, despite the the possibility of the Trump administration cancelling the sanctions waivers it agreed to early last year, its CEO Patrick Pouyanne confirmed late last month. It has also emerged that Total is in talks with Iran’s National Petrochemical Company about the construction of a petrochemical complex on the shores of the Persian Gulf in a deal that would involve participation of the Islamic Republic’s private sector.
The decision to go ahead with the SP11 project marks a change of heart from Total that said in February that its participation depended on the new US administration renewing waivers on the sanctions originally imposed on Iran on account of its nuclear program; since then Washington has made it clear that it would have no hesitation in cancelling the sanctions waivers if it believed Tehran was not curbing its nuclear program in line with its 2015 deal with world powers.
TOTAL CEO Patrick Pouyanne“It is worth risking $1bn because it opens up a huge market,” Pouyanne said. “We are perfectly conscious of some risks. We have taken into account (sanctions) snap-backs, and we have to take into account regulation changes….The US waivers have been renewed and they will be renewed every six to eight months. We have to live with some uncertainty”.
The South Pars 11 project will eventually have a daily production capacity of 1.8 billion cubic feet or 370,000 barrels of oil equivalent. If the deal goes through, Total will operate the project with a 50.1% controlling stake with China’s CNPC and Iran’s Petropars owning 30% and 19.9% respectively. The petrochemical complex would concentrate on the production of ethylene and polyethylene and would include steam-cracker and downstream units which would be deployed to sell the end products to both domestic and international markets.

Source: tasnimnews