On Monday, Total SA, based in France, said it has agreed to a deal win Iran to invest $1 billion in a giant gas field in the Islamic Republic, which marks the first big investment in many years by a company from the West in Iran's oil sector.
In August 2015, Iran and six worldwide mediators, including Russian Federation, reached a historic deal with Iran to ensure the peaceful nature of Tehran's nuclear program in exchange for the removal of sanctions, in particular in the energy sector.
"The global contract for development of Phase 11 of South Pars in the framework of IPC (Iranian Petroleum Contract) will be signed on Monday, July 3, at 14:30, at a ceremony in Tehran attended by Iranian oil minister Zanganeh and senior officials from France's Total, China's CNPCI and Iran's Petropars", the Iranian oil ministry official said.
South Pars is the continuation, offshore Iran, of a geological formation known in Qatar as "North Field" which provides the feed gas for its 14 LNG trains.
According to the International Energy Agency, the field holds an estimated 51 trillion cubic meters of in-situ natural gas and some 50 billion barrels of natural gas condensate.
Total has a 50.1% share in the deal.
Wood Mackenzie senior research analyst Homayoun Falakshahi said this was a significant event for Iran's oil and gas industry. The backers are expected to inject an initial $2 billion into the 20-year project to pay for the drilling of about 30 wells and two well-head platforms that will connect the site to onshore processing facilities.More news: Andy Murray aims to be fighting fit for Wimbledon defence
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SP11 will be developed in two phases. Austrian energy company OMV in late January hosted representatives from Iran's Dana Energy Co., a player in exploration and development, to sign of new arrangements for potential work. A second phase will involve the construction of offshore compression facilities, the firm said.
Current US President Donald Trump is still reviewing the sanctions against Iran, as his administration has maintained that Tehran is linking nuclear enrichment to its ballistic missiles.
European majors are warming to Iran in the post-sanctions environment.
The U.S. and other world powers lifted many sanctions after the country promised to roll back its nuclear program.
Hopes are high in Iran that the Iranian Petroleum Contract will enhance local companies' capabilities.
The investment will be the first deal conducted under Iran's new Iranian Petroleum Contract (IPC).