Only UN Sanctions Can Drive Total Out of SP11
Iran's petroleum minister, Bijan Zangeneh, has said France's energy giant Total could not quit its deal for developing Phase 11 of the massive offshore South Pars gas field under "normal" conditions.
"The contract for the development of Phase 11 of South Pars with a Total-led consortium is valid. This company cannot withdraw from this project under normal conditions," Zangeneh said.
Meanwhile, Total CEO Patrick Pouyanné told CNN: "We are working on the project. We launched the tenders; we should award contracts by January."
"I hope by that time, Congress will have an answer for the president and the president will have to renew, or not [renew], the certification," he added.
US President Donald Trump's get-tough approach to Iran has raised speculation about the huge energy investment which was signed just four months ago.
Under the deal, Total and China's CNPC agreed to invest billions of dollars in Iran to develop the giant South Pars gas field in partnership with Iran's Petropars.
It was the first investment of its kind since sanctions on Iran were eased in 2016 after Tehran promised to roll back its nuclear program. Trump has threatened to quit the nuclear deal if the US Congress and America's allies fail to strengthen it.
"Either we can do the deal legally if there is a legal framework," Pouyanné told CNN Money Emerging Markets Editor John Defterios.
"If we cannot do that for legal reasons, because of [a] change of [the] regime of sanctions, then we have to revisit it," he added.
Asked by "Iran Petroleum" about the future of the deal, Zangeneh said: "We have a legally valid contract with Total, CNPC and Petropars, in which it has been specified how and under what conditions this company (Total) can pull out of this project."
"Total could quit this project only under conditions that international sanctions are imposed on Iran by the UN Security Council," he added.
Iran's nuclear deal with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA), all oil companies are authorized to operate projects in Iran in compliance with international conditions.
After the deal was signed in Tehran, Total's chief expressed hope that international relations and diplomacy would help the company remain in Iran.
SPOL Talks Under Way
Separately, Zangeneh said that talks were under way for the development of the oil layer of South Pars gas field.
He said some problems occurred after Total acquired Denmark's Maersk "because Total became the contractor of both sectors" of South Pars, held jointly by Iran and Qatar.
Maersk had applied to develop the oil layer of South Pars, and held intensive talks with the National Iranian Oil Company (NIOC), raising hopes for the finalization of an agreement.
However, Total's acquisition of Maersk's assets led to problems as Total's involvement in the Qatar-held section of the oil layer would give rise to conflict of interests.
Zangeneh said the Danish firm had not quit talks, adding that Iran had invited several other companies to join negotiations for the oil layer development.
"In addition to companies that had been already invited to develop the oil layer of South Pars, we invited several others, most of which declined our invitation; however, given the complexity of development of South Pars oil layer some companies rejected our invitation." he added.
No Cheap Gas Supply to Norway
Zangeneh said that Norway's Helma had been charged normally for natural gas deliveries.
"The minimum price of gas sold [to Helma] is the same as the price at which gas is delivered to petrochemical plants, so Iran has not undersold its gas," he added.
"The price announced for natural gas is general and every company can invest in this sector under conditions laid out to that effect," said the minister.
Iran could export its first liquefied natural gas cargo from the Persian Gulf as early as next year, if it presses ahead with its proposed floating LNG production project.
National Iranian Oil Company has signed a contract with joint venture company IFLNG to deploy a 500,000-tonne barge to liquefy gas from the giant South Pars field in the Persian Gulf and store and transfer the cargoes.
IFLNG is a joint venture between Helma Vantage of Norway and Iran’s Kharg Gas Refining Company. They are talking to Belgium-based ship-owner Exmar about a short-term charter for Caribbean FLNG.
Zangeneh said: "Iran will sell gas to an industrial unit and the customer will then sell LNG."
Iran-Russia Cooperation
Zangeneh also said memorandums of understanding were signed with a number of Russian companies for future cooperation.
Asked about the reported $30 billion investment envisaged by Russian companies, he said: "Rosneft announced this issue and we are interested in their investment, but we are currently in the stage of MOU and they should submit their proposals to us."He added that the deadline had not yet expired for them to submit their proposals.
OPEC States Favor Cut Extension
Zangeneh said a majority of OPEC members support extending output cuts but a final decision will be taken at their next meeting on Nov. 30.
“The majority of members support the extension of the plan, but the final decision should be taken at the next OPEC meeting,” he added.
The Organization of the Petroleum Exporting Countries together with a group of non-OPEC producers led by Russia has reduced output since January 1 under an agreement set to run until next March.
Producers are curbing their output in hopes of supporting prices and reducing inventories.
Zangeneh also said: “If the production cut is extended, the exemption for Iran will also be extended.”
OPEC allowed Iran to increase output slightly to help it recover market share lost while under Western sanctions.