Oil Minister Zanganeh said negotiations with the Danish business conglomerate, Maersk Group, were being pursued over development of South Pars Oil Layer (SPOL).

Bijan Zangaeh, while pointing to continuation of talks with Maersk Group, voiced optimism that final agreements will be reached in near future.

“What’s more, Pars Oil and Gas Company Ltd. has been chosen as the contractor of the project,” he continued.

In the same line, Deputy Head of NIOC for Development and Engineering Affairs Gholamreza Manouchehri recounted on results of negotiations asserting “for the moment, talks will continue with Denmark’s Maersk until a contract is signed in near future.”

Manouchehri’s remarks come at a time when he has asked Petroiran Development Company to seek consultations from Maersk Group. Such an emphasis seems to be rooted in the fact that the Danish firm is in charge of developing South Pars Oil Layer project.

Complementing oil minister’s statements on the change in the project’s contractor, the NIOC official said “the primary contractor of the project was Pars Oil and Gas Company though the responsibility was later shifted to the Iranian Offshore Oil Company (IOOC) before returning to the former again based on recent decisions.”

“SPOL was supposed to yield 35,000 oil barrels per day on a regular basis though the output figure currently stands at 25 thousand barrels and will hopefully reach the envisaged level by the end of current year,” stressed the official.

Until a year ago, Maersk Group was in charge of development and production in the Qatari side of South Pars Oil Layer and it had managed to recover one billion barrels. Nevertheless, Total’s proposal to Qatar over the layer led the Danish firm out of the oil-rich region and marked an end to its partnership with Qataris.

Afterwards, Maersk launched more serious talks with National Iranian Oil Company (NIOC) though no final deal has been sealed yet. Several decades ago, the Danish business conglomerate held sessions with the Iranian Ministry of Petroleum though its proposals were rejected and Petroiran Development Company was put in charge of the developmental project.

Several marginal issues in the drilling project and failure of Schlumberger drilling program brought about a series of unwanted events until the first Floating Production, Storage and Offloading (FPSO) unit was purchased.

Return of Maersk Group to Iran is reminiscent of the remarks made by International Petroleum Consultant and the then Director of Maersk for legal affairs and contract Pasha Ramazanpour who said “despite willingness of the Danish firm to develop the oil layer, the project has been assigned to a newly-formed Iranian company.”

A.P. Moller–Maersk Group, also known as Maersk, is a Danish business conglomerate. A.P. Møller – Maersk Group has activities in a variety of business sectors, primarily within the transport and energy sectors.

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Iran’s President Hassan Rouhani inaugurated five new phases of the South Pars Gas Field on Sunday which were completed at a cost of $20 billion, local media reported.

The inauguration of phases 17-21 paves the way for Iran to overtake neighboring Qatar in production from the offshore gas field which it shares with Iran, Iranian officials said, reported AFP.

Iran has so far developed 12 phases in the field – phases 1, 2&3, 4&5, 6-8, 9&10, 15&16.  The remaining phases are 11, 12, 13, 14 and 22-24.

“Our production has reached 575 million cubic meters per day,” said Rouhani at the ceremony.

Iran’s total gas production is 885 million cubic meters per day.

It is estimated that production from every two phases of South Pars would generate $3.5-$4 billion for Iran. Reports further said that the total investments in phases that were inaugurated today would be reimbursed within less than two years.

“At the height of sanctions, with the help of Iranian engineers and workers, we succeeded in developing 11 phases of South Pars,” noted Oil Minister Bijan Namadar Zanganeh.

South Pars is the largest known gas reserves in the world. Iran has the largest gas reserves in the world, and the fourth-largest oil reserves.

Each of the new projects produces 28 million cubic meters per day, Zanganeh told reporters late Saturday.

Qatar announced earlier this month that it was ending a 12-year ban on new projects at its section of the shared field. Qataris call their part of the deposit the North Field, which together with South Pars forms the world’s largest reserves of non-associated gas. Iran has no plans to impede Qatar over its activities at North Field, Zanganeh said. “They can carry out their development projects as we do ours,” he said.

 Iranian President Hassan Rouhani inaugurated Phase 19 development project of the South Pars gas field (SP. 19).

Iran is targeting the export of 50 million cubic meters of gas per day to neighboring Iraq once that country can arrange for a letter of credit to finance the purchase, Zanganeh said.

Since the nuclear deal went into effect in January 2016, Iran has increased oil production from 2.6 million barrels per day (mbd) to 3.9 mbd, while more than doubling its oil exports.

Iran has signed a flurry of deals with Western companies over the past year since the easing of international sanctions on Tehran after an accord was reached over its nuclear program.

Iran needs foreign investment for repairs and upgrading of its oil and gas fields. It also seeks the transfer of technology to its oil industry after a decade of sanctions.

In November 2016, France’s Total became the first oil major to sign a big deal with Tehran since the lifting of sanctions and agreed to help it develop the world’s largest gas field, South Pars.

Shell signed a provisional deal in December to develop Iranian oil and gas fields of South Azadegan, Yadavaran and Kish.

Iran has named 29 companies from more than a dozen countries as being eligible to bid for oil and gas projects using the new, less restrictive contract model.

The firms include Shell, France’s Total, Italy’s Eni, Malaysia’s Petronas and Russia’s Gazprom and Lukoil, as well as companies from China, Austria, Japan and other countries.

Russia’s Zarubezhneft signed an MoU for a feasibility study on two joint fields in the west of the country.

Norway’s International Aker Solutions Company signed an MoU to modernize Iran’s oil industry.

Last May, Austria’s OMV signed an MoU for projects in the Zagros area in western Iran and the Fars field in the south.

South Korean Daewoo Engineering and Construction (Daewoo E&C) signed an MoU to construct an oil refinery in Bandar Jask, on the southern coast of Iran.

Italy’s Saipem signed MoUs to cooperate on pipeline projects, upgrading of refineries and development of Tous gas field in the northeastern province of Khorasan Razavi.

Norwegian oil and gas company DNO said it was the second Western energy company after Total to sign a deal with Iran under which it agreed to study the development of the Changuleh oilfield in western Iran.

Lukoil, Russia’s second biggest oil producer, hopes to reach a decision on developing two new oilfields in Iran.

Germany’s Siemens AG signed an MoU in May to overhaul equipment and facilities at Iran’s oil operations and refineries.

BASF’s Wintershall oil and gas exploration subsidiary signed an MoU with the National Iranian Oil Company in April 2016.

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South Korea‘s intake of Iranian crude oil soared to a record high in March and its first-quarter crude imports from Iran nearly doubled on year, reflecting Tehran’s efforts to raise output after the lifting of sanctions early last year.

The increase in volumes since international sanctions against Tehran were lifted in January 2016 has made Iran the second-largest oil supplier to South Korea after Saudi Arabia, in the first quarter of 2017, reported Reuters quoting preliminary customs data on Saturday.

Iran was fifth-largest in the first quarter of 2016, behind Saudi Arabia, Iraq, Kuwait and Qatar, according to data from Korea National Oil Corp. (KNOC).

The official KNOC data ranked Iran as second-largest for the first two months of the year. KNOC figures for March and the quarter are due out in one week.

In March, the customs data showed South Korea imported 2.26 million tons of Iranian crude, or 534,368 barrels per day (bpd), up 118.8 percent from 1.03 million tons a year ago, reaching a record. That was up 38.3 percent from 1.63 million tons in February.

The world’s fifth-largest crude importer and one of Tehran’s biggest customers shipped in 5.68 million tons of Iranian crude in the first three months of 2017, or 463,234 bpd, up 92.4 percent from the 2.96 million tons imported during the same period a year ago.

Meanwhile, oil shipments from Saudi Arabia to South Kore, rose 10.9 percent to 3.52 million tons, or 831,413 bpd, in March on year. That was down 2.6 percent from 3.61 million tons a month ago as the world’s top oil exporter complies with the OPEC deal to cut supplies.

Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members reached an agreement to curb output last year by almost 1.8 mbd in the first half of 2017. Iran was exempted from the deal.

South Korea’s crude oil imports from Saudi Arabia fell 10 percent to 10.44 million tons in the first quarter of this year, or 850,614 bpd, from 11.61 million tons in the previous quarter, but that was 5.7 percent higher on year.

Overall, Asia’s fourth-largest economy brought in 12.68 million tons of crude oil in March this year, or nearly 3 mbd — up 10.1 percent from 11.52 million tons a year ago — according to the data.

For the first quarter of 2017, South Korea imported 36.94 million tons of crude, or 3.01 mbd, up 4.6 percent from 35.32 million tons a year earlier.

Final data for the country’s March crude oil imports will be released by state-run KNOC later this month.

Iran’s Oil Ministry said early this month that the country’s total exports of crude oil and condensates had exceeded three million barrels per day — a level not seen for at least the past six years.

Oil Minister Bijan Namdar Zanganeh said, “The pace of growth in Iran’s crude oil production and exports has amazed international observers who did not think Iran could raise its production by one million barrels per day within three to four months after the removal of sanctions.”

According to the ministry, almost a third of Iran’s oil exports, or over 700,000 bpd, is currently destined for Europe. The country exported around 600,000 bpd of oil to Europe during pre-sanctions years.

A top oil official said last December that Iran had started exports of condensate to Europe by sending a maiden cargo of one million barrels to certain EU clients.

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Iran is making rapid forays into the European crude oil market and selling its parcels to countries such as France, Italy, Greece and Spain, UK-based global shipping consultancy, VesselsValue said.

“Following the removal of sanctions, new players have emerged in the mix,” VesselsValue said in a report. Iran’s crude oil shipments have been delivered to destinations ranging from Malaysia and Singapore in Asia to Syria in Africa, it said, according to Platts.

In 2016, the number of voyages to deliver crude from Iran to France was estimated at 21, while Italy, Greece and Spain took 15, 14 and 13 shipments respectively, it said. This includes shipments in VLCC, Suezmaxes and Aframaxes.

In July 2012, the European Union had banned the import of Iranian crude by member countries and also the provisions of EU-linked insurance, which included protection and indemnity cover for any shipments of Iranian crude, irrespective of destination. The sanctions were relaxed in January last year.

There has also been a significant change in the geographical mix of owners whose ships were used to lift Iranian cargoes of crude.

Prior to the lifting of sanctions, the National Iranian Tanker Company (NITC) was the largest provider of tonnage to load cargoes from Iran, in addition to Iran-o Hind, Idemitsu Tanker, JX Ocean and KLine.

The Iranian ships were provided local insurance cover but there were always concerns over the possibility of any potential liability in event of maritime accidents in waters of importing countries which were permitted to purchase crude from Tehran.

During the period of sanctions, India permitted Iranian ships to call at Indian ports based on Tehran’s local insurance cover, China used ships of domestic companies while the Japanese government provided insurance cover only for VLCCs.

South Korea and Taiwan also took deliveries of cargoes purchased on a cost and freight (CFR) basis.

Now, “the group of shipowners lifting crude from Iran has changed dramatically to include those from Greece and Belgium”, VesselsValue said.

“The influx of owners from Greece has significantly increased the number of Suezmaxes plying on the ex-Iran voyages to 81 last year, compared with 15 in 2015,” the report said.

While NITC continues to be the market leader in terms of the number of ships deployed for loading crude from Iran, other companies with ships loading from the country include Dynacom, Delta Tankers, Euronav, Polembros, COSCO, Avin International, Olympic Shipping and Management, New Shipping and Thenamaris, it said.

Last month, two Iranian VLCCs, the ‘Huge’ and the ‘Snow’ delivered a mix of the country’s heavy and light crude grades to Shell at Rotterdam, according to trade sources and S&P Global Platts.

In late January, Iran’s Oil Minister Bijan Namdar Zanganeh said that the country was producing 3.9 mbd crude and was set to reach its 4 mbd target by the end of the Iranian year on March 20.

This will mark the return of Iran’s output to levels last seen before 2012, when international sanctions were imposed on the country.

A Platts survey released on February 6 estimated Iranian production at 3.72 mbd in January, up 30,000 bpd from December.

While cuts in crude production have been initiated under an OPEC-led agreement, Iran is allowed to boost its output to 3.797 mbd. If this materializes, Iran’s output would exceed its OPEC quota by more than 100,000 bpd.

This is expected to translated into more crude shipments from Iran. According to VesselsValue, the seaborne exports of Iranian crude are rising significantly.

The number of crude laden shipments from Iran increased to 563 last year — up from 66 in 2012 and 277 in 2015, their data showed.

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NIOC and Malaysia’s PETRONAS (Petroliam Nasional Berhad) will ink an MoU this week on development of Cheshmeh Khosh and South Azadegan oilfields.

Following the inking of Memoranda of Understanding (MoUs) for conducting developmental studies in Azadegan oil field with France’s Total, Britain’s Royal Dutch Shell and Inpex Corporation of Japan, a cooperation agreement will be also inked in the current week between the largest Malaysian oil firm PETRONAS and the National Iranian Oil Company (NIOC) to carry out similar studies in Iran’s joint oil field with Iraq.

Moreover, NIOC will also sign into another deal with the Malaysian side in order to perform studies for boosting recovery factor in Cheshmeh Khosh field.

In recent months, NIOC has sealed several MoUs with Austria’s OMV and Gazprom of Russia aiming to increase recovery factor of Cheshmeh Khosh in the west of Iran.

The accord between NIOC and PETRONAS is scheduled to be signed on Wednesday in Tehran between officials of the two oil companies.

On the sidelines of his meeting with Minister of Foreign Trade and Industry of Malaysia Dato’ Seri Mustafa Muhammad, Iranian Oil Minister Bijan Zanganeh said Iran welcomes arrival of Malaysian firms, Petronas in particular, since they hold a long history of relations with the country’s oil industry.

Prior to sanction years, the bulk of cooperation between National Iranian Oil Company (NIOC) and Malaysia pertained to sales and exports of crude oil as Iran was deploying a daily average of 50 to 60 thousand barrels of crude oil to Malaysia’s PETRONAS under spot contracts, he continued.

One of NIOC’s most significant deals with Petronas was over the developmental project of South Pars Phase 11 which was supposed to be accomplished in collaboration with France’s Total and Repsol S.A. of Spain though the agreement was violated as a result of international sanctions against Iran.

Despite having had only a few years of activity in the oil and gas industry, PETRONAS remains among rare oil and gas companies who enjoy functionality and operational teams in both upstream and downstream oil sectors.

The Malaysian oil and gas company is currently active in numerous fields including oil and gas refining, construction of pipelines, LNG transfer, gasoline stations management, manufacturing and marketing of petrochemicals and chemicals, exploration, exploitation, drilling, production and storage of crude oil, petroleum products and natural gas.

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France’s Total will equip Phase 11 of South Pars Gas Field with a pressure booster station to regularly pump two billion cubic feet of gas per day for nearly 20 years as part of a deal between Tehran and the French energy giant.

Oil Minister Bijan Namdar Zanganeh told Tasnim News Agency on Monday that Total will assume the responsibility to install a pressure booster station in Phase 11 to fix its output at two billion cubic feet per day for 15 to 20 years.

Earlier, Iran and Total signed an agreement on the development of South Pars Phase 11. The deal involves a consortium led by Total, which also includes China National Petroleum Corporation (CNPC) and Iran’s Petropars.

The first output of the phase is expected 40 months after the deal is struck, the minister further said, noting that Total will set up the pressure booster at the huge energy hub three to four years after the first production.

Noting that the move is aimed at tackling the drop in energy pumped from Phase 11, he added that other phases of the gas field will be also equipped with pressure booster stations in the future.

According to the deal, Total would operate the project with a 50.1 percent stake, while Petropars, a subsidiary of the NIOC, and Chinese state-owned oil and gas company CNPC would have a 19.9 percent and 30 percent stake, respectively.

South Pars Phase 11 will have a production capacity of 1.8 billion cubic feet per day, or 370,000 barrels of oil equivalent per day. The gas from the field will be fed into Iran’s gas network.

South Pars covers an area of 9,700 square kilometers, of which 3,700 square kilometers are in Iran’s territorial waters in the Persian Gulf. The remaining 6,000 square kilometers are located off Qatar.

The gas field is estimated to contain a significant amount of natural gas, accounting for about eight percent of the global reserves, and approximately 18 billion barrels of condensates.

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Minister of Petroleum Bijan Zangeneh said on Thursday as of next year, 10 billion dollars will be added to Iran’s oil income.
In a televised interview, Zangeneh outlined Iranian oil diplomacy achievements, which excluded Iran from OPEC output freeze plan.

Iran’s output will be 3.797 million barrels per day per an agreement reached in the OPEC 171st ordinary meeting on Wednesday, November 30.

Hence, Iran’s average crude production level for the first half of 2017 will be 3.797 million barrels.

As of January 2017, Iran’s production will be 3.707 million per day, adding 90,000 barrels per day to the figure gradually.

Per OPEC approved table, Iran will be the only country to add to its production in the first six months of 2017: 90,000 barrels per day on the average. Iran’s average output level would not exceed 3.797 million barrels per day in the first six months of 2017.

Iran will be able to produce 3.9 million barrels per day oil in certain weeks in the first six months of 2017 but the average figure in the six-month period would not exceed 3.797 million per day.

Per OPEC agreement, Saudi Arabia should cut 486,000 barrels per day from its output to bring its output level overall to 10.058 million barrels per day.

The petroleum ministers of the Organization of the Petroleum Exporting Countries (OPEC) decided to curtail their total production by 1.2 million barrels a day.

For the first ever since 2008, OPEC will cut its production in consistency with the Algiers September 28 accord.

In accordance with the Algiers accord, the Organization’s output ranged between 32.5 million barrels per day to 33 million barrels per day.

Oil prices are predicted to rise after the November 30 agreement to 50 to 55 dollars a barrel.

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The National Iranian South Oil Company has signed its first non-disclosure agreement (NDA) with a consortium of international companies, known as Pergas, for carrying out studies over two oilfields in Iran.
The consortium comprises 11 European, Canadian and Asian firms as well as the Sharif University of Technology and has signed the NDA for holding studies on Karanj (Asmari, Pabdeh, and Khami oil deposits) and Shadegan oilfields (Asmari and Bangestan reserves).

Based on the deal, the consortium will have 6 months to hand over the result of its studies on the fields to the NISOC. Pergas may submit its proposal for development of the fields sooner if it is ready.
Minister of Petroleum Bijan Zanganeh has spent a long time on investigation of the framework of NISOC’s new framework of oil contracts.

Over 60 companies are currently in talks with the NISOC for cooperation with the company under the new framework of the contracts.
The deals consider development of four fields of Parsi, Karanj, Rag Sefid and Shadegan, including nine oil reserves, are specified for development based on the contract after announcement and confirmation of the Minister of Petroleum.

The nine reserves include Asmari, Pabdeh and Khami in Karanj field, three reserves in Asmari, Bangestan and Khami in Rag Sefid field, Asmari field in Parsi field and two reserves of Asmari and Bangestan in Shadegan field.
The four fields were selected for the purpose due to the recovery coefficient, enhanced recovery and integration of the reserves.

NISOC contracts are part of a basket of contracts that is operational in nature, while its purpose is development of reserves and using enhanced recovery methods./Shana

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By: Maryam Azish/ Iran’s petroleum industry is considered as the main generator for national economy following the implementation of Iran’s nuclear agreement with 5+1, known as the Joint Comprehensive Plan of Action (JCPOA).

Energy plays a pivotal role to provide financial resources for Iranian public services and the industrial sector and the deal has paved the way for removal of sanctions on Iranian’s oil sector and benefited the country, the top oil producers and exporters as well as the oil consuming countries.

The absence of Islamic Republic of Iran’s from global markets during sanctions era had caused major problems because some countries were not able and ready to replace country’s oil from other states due to the lack of infrastructure.

The petroleum industry and petrochemical structure of some countries were compatible with Iran’s crude oil and any change for compatibility with other countries would have proven difficult and costly.

However, the implementation of JCPOA created a new opportunity for Iran, oil companies and consumers so that they could recommence their trading like in the past.

Thanks to the JCPOA, the foreign countries and big oil companies have had an immense opportunity for investment in Iran’s oil sector and buying oil from the Islamic Republic.

Following the implementation of the JCPOA in January, the European countries resumed oil imports from Iran or began negotiations for imports of oil from the major oil producer and a new blow has been breathed in Iran’s oil sector which would be materialized in the short-term and some others in the long-run.

The international relations of Iran which is known as the fourth largest oil and the second largest gas reserves in the world have undergone major change following the implementation of JCPOA, and its icy relations with other countries seems to be thawing in the years of sanctions.

From the early days of clinching the JCPOA, a large number of directors of international companies active in oil industry have traveled to Tehran along with their respective country’s economic delegations and voiced their willingness to resume the ties cut-off for years.

Thanks to new model of oil contracts, dubbed as the Iran Petroleum Contract (IPC) which aimed at attracting foreign companies and investments in Iran’s oil and gas development projects, a large number of officials of the most reputable European oil companies, Total SA of France, the world’s fourth major oil company, and Royal Dutch Shell, the Anglo-Dutch firm in particular, have so far held talks with Iranian side aimed at amending mutual cooperation.

Iran’s Oil Export to Europe Up

Recently, National Iranian Oil Company (NIOC) announced that Iran’s oil exports to Europe, which had nearly stopped during sanctions, has risen to 700,000 b/d and the country’s oil exports in October stood at 2.44 million barrels per day.

The Executive Director for International Affairs at National Iranian Oil Company (NIOC) Mohsen Ghamsari has announced that Iran’s volume of oil exports would rise by 150 thousand barrels per day (bpd) within months, stating that the daily amount of 600 to 650 thousand barrels of crude oil are being deployed to the European countries.

Touching upon Iran’s exception to OPEC’s quota and the possibility to boost crude exports from the country, Ghamsari underscored that a daily average of 2.2 million barrels of oil is now being deployed to world markets, adding that under present circumstances, the consumption volume in domestic markets and refineries stands at about 1.8 to 1.85 million barrels per day.

Meanwhile, the Islamic Republic of Iran is also seeking to achieve 13 percent of the production share at OPEC and the feasibility of boosting production by 500 thousand bpd after the oil freeze deal.

Meanwhile, so far Iran has announced several times that it would spare no effort to increase crude exports to 2.35 million bpd in a few months in order to reach pre-sanction levels.

Iran’s oil sales to Asia up 92%

On Oct 2016, Iran’s Ministry of Petroleum reported a dramatic jump in its oil exports to Asia, emphasizing that its supplies to the world’s largest consumption zone are now much closer to pre-sanctions levels.

According to the Ministry’s report, Iran’s exports of crude oil to Asian clients for August stood at around 1.7 million barrels per day (mb/d). The figure showed an increase of 92 percent year-on-year, adding the Asian countries currently comprise 63 percent of Iran’s oil export destinations.

Iran’s Petroleum Minister Bijan Zanganeh said in mid-October that Iran’s oil production had already reached close to pre-sanctions levels. Zanganeh emphasized that the country is currently producing about four million barrels of oil per day, PressTV wrote.

Earlier, Reuters quoted market data as showing that Iran’s oil sales to Asian clients for July stood at an average of 1.6 mb/d, adding that the figure showed an increase of above 60 percent compared to the same period last year.

China imported 0.56 mb/d which was the largest volume of imports among the four Asian clients of Iran’s oil, Reuters said. India was the second biggest importer of Iranian oil at 0.52 mb/d followed by South Korea and Japan each respectively with import volumes of 0.29 mb/d and 0.25 mb/d.

In mid-January, a series of economic sanctions that had been imposed on Iran for multiple years were removed after a deal between the country and the 5+1 – the five permanent members of the UN Security Council plus Germany – was implemented.

The sanctions barred foreign investments in the Iranian oil industry and also imposed a low ceiling of 1 million bpd on the country’s oil exports among a series of other economic restrictions.

The aforementioned points illustrate that the historical nuclear deal has not only benefited the Islamic Republic of Iran but also has provided advantages for many oil companies and consumers.

The deal has paved the way for major oil companies to make investment in Iran’s development and exploration projects.

Additionally, fostering production capacity and enhancing the rate of recovery from oil and gas fields and reinforcing Iran’s share of oil and gas markets will benefit consumers and guarantee their energy supply security.

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Iran signed a deal with France‘s Total on Tuesday to develop a major offshore gas field — its first big contract with a Western energy firm since sanctions were lifted in January.
[Photo Report]

Total will lead a consortium, which will also include China National Petroleum Corporation (CNPC) and Iran’s Petropars, to develop Phase 11 of the South Pars field under a 20-year contract worth $4.8 billion (€4.3 billion), AFP reported.

The project will eventually supply 50.9 million cubic meters of gas per day into Iran’s national grid, and marks a breakthrough in the Oil Ministry’s efforts to attract Western investment and know-how to improve its outdated energy infrastructure.

The companies involved signed a memorandum of understanding in Tehran on Tuesday, and the final agreement will be inked early next year, said head of Total’s Middle East exploration and production, Stephane Michel.

It is the first deal of its kind since most international sanctions on Iran were lifted in January under a nuclear deal with world powers.

Iran’s Deputy Oil Minister Amir Hossein Zamani-Nia said another major deal with a European company would be signed “in two to three weeks”.

Tuesday’s signing represents Total’s return to Iran, which has the largest gas reserves and fourth-largest oil reserves in the world.

Total helped develop phases two and three of South Pars, but effectively left Iran four years ago when France joined European Union partners in imposing sanctions, including an oil embargo. “We’re the first Western major to return to Iran. We’re very happy,” Total Chairman Patrick Pouyanne told AFP.

“It’s important because it’s always when we innovate and when we are first that we score points,” he added.

Iran’s Oil Minister Bijan Namdar Zanganeh thanked Total and CNPC for working with Iran despite ‘difficult conditions’.

“I hope the international companies that are still hesitating to come to Iran will be encouraged to take the leap,” he said.

The South Pars field in the heart of the Persian Gulf is shared by Iran and Qatar, and contains some 14 trillion cubic meters of gas or eight percent of the world’s known reserves.

“It’s a field we know well because we produce on the Qatar side,” Pouyanne said.

He said there would be none of the banking problems that have bedeviled recent trade deals with Iran, because Total would use its own cash.

Despite the nuclear deal, the United States has maintained a raft of other sanctions, leaving global banks fearful they could still face massive fines for doing business with the Islamic Republic.

Nonetheless, Tehran has been inundated by trade delegations from Europe in recent months. France has led the way, with major deals already lined up for Peugeot and Renault.

Total first signed an agreement in 2004 to develop Phase 11 and a gas plant at South Pars, but it was never finalized.

Under the new deal, Total will control 50.1 percent of the consortium, with CNPC taking a 30 percent stake and Petropars 19.9 percent.

The first phase will cost around $2 billion and consist of 30 wells and two well-head platforms connected to existing onshore treatment facilities.

Iranian officials announced last month that they would invite the first tenders for oil projects within two months and that foreign firms would be allowed to take lead roles.

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