The first major Western energy investment since sanctions against Tehran were lifted will cost up to $5 billion, with production expected to start within 40 months, an Oil Ministry source said, Reuters reported.

The US and other world powers lifted sanctions after the country pledged to roll back its nuclear program.

With the 20-year deal, Total is now returning to Iran, where it first began operating in the 1990s. Total CEO Patrick Pouyanné said in a statement on Monday that the investment would be “in strict compliance with applicable national and international laws”.

The US still has restrictions in place that block most American companies from investing in Iran. And some Western companies have been reluctant to jump in since Iran still faces sanctions that prevent firms from transacting with Iran in US dollars.

Total estimates the first phase of the project will cost around $2 billion. It is taking a 50.1 percent stake in the South Pars project. CNPC will own 30 percent while the other 19.9 percent will go to Petropars.

The project will have a production capacity of two billion cubic feet per day, or 400,000 barrels of oil equivalent per day including condensate, according to Total.

Iran’s Oil Ministry predicts the project will eventually produce gas products worth $54 billion based on current prices. The gas will start flowing into the Iranian market in 2021.

Iran has significantly ramped up its energy production since the sanctions were relaxed.

Figures from OPEC show Iran has boosted its daily crude oil production by more than 33 percent since 2015.

Iran sits on nine percent of the world’s proven oil reserves and 18 percent of the planet’s natural gas, according to data from BP’s Statistical Review of World Energy.

Iran and Qatar share the South Pars field.

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 to repair and upgrade its oil and gas fields. It also seeks the transfer of technology to its oil industry after a decade of sanctions.

Iran has named 34 companies from over 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 to conduct feasibility studies 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.

In May 2016, 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.

President Rouhani:
Developing South Pars Phase 11 not only an economic contract, but also a scientific, technological, management cooperation

President Rouhani met with the Chairman and CEO of France’s Total company and described South Pars region as an important centre for developing international cooperation with Iran in the field of energy-technology.

In the meeting that was held on Monday in Tehran, Dr Rouhani told Total’s Patrick Pouyanné: “Due to the good potentials and hard-working young men in Iran, the contract of developing Phase 11 of South Pars is not only an economic one, but also a scientific, technological and management cooperation”.

Total CEO: We seek a long-term cooperation with Iran

“The Islamic Republic of Iran and France have always had good relations and cooperation with each other,” he continued saying.

Referring to France’s position in economy and energy technology, he added: “The signing and execution of this contract will be a significant step in development of economic and technological cooperation between the two countries”.

Stating that the 11th administration has attempted to finalise the Joint Comprehensive Plan of Action (JCPOA) to clear the path for economic cooperation between major companies and Iran, the President said: “Fortunately, this political will from the Iranian side and among P5+1 countries paved the way for this agreements with Total”.

President also referred to his Europe and France visit after the signing of JCPOA, adding: “In Paris, there was a good political will among the authorities of both countries to develop cooperation and important agreements were signed between the two countries to deepen ties and cooperation”.

“It is our policy to cooperate with major companies such as Total,” said Dr Rouhani, adding: “Currently, projects in gas and oil worth roughly $200bn are ready to be invested on and major foreign companies can cooperate in these projects”.

“We must work hard to achieve peace and stability in the region serving economic progress and development of the region, because scientific and developmental cooperation can help us combat ignorance and poverty as the bedrocks of terrorism expansion,” he continued.

The President also expressed hope that with the new agreements and cooperation in the field of gas, oil and petrochemicals, Iran and France take considerable steps in developing ties.

During the meeting, the Chairman and CEO of France’s Total company Patrick Pouyanné also expressed happiness over meeting the President of the Islamic Republic of Iran and described the contract as a very important one, saying: “Today, we are very happy that we could finalise and execute the contract with the help of the authorities of the two countries”.

Stating that the JCPOA agreement has paved the way for further development of relations between European countries and Iran, he said: “We are optimistic about our cooperation with Iranian companies”.

“We seek a long-term cooperation with Iran,” continued Pouyanné.

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Deputy Head of NIOC for Development and Engineering Affairs Gholamreza Manouchehri said “a list recently published by National Iranian Oil Company was relevant to applicants from Spain, Germany, Italy, Austria, Japan, China and South Korea which had been qualified in Pre-Qualified Iran’s Oil and Gas Upstream Projects Tender Round.”

“Names of Lukoil and Gazprom from Russia were on the list,” highlighted the official asserting that a second list of qualified foreign companies will be soon released.

Manouchehri, while estimating that Russian firms, whose name were among qualified candidates, will be present in the second, underlined that NIOC has inked Memoranda of Understanding (MoUs) with Russia’s Zarubezhneft and Tatneft both of whom were absent in the first published list.

“NIOC must have approved of all firms with which a cooperation agreement has been inked,” noted the official.

He further maintained that claims on disqualification of Russian firms reiterated that Iran welcomed cooperation with credible Russian parties who held new technologies.

National Iranian Oil Company has so far sealed MoUs with seven Russian oil giants for development projects or boosting recovery factor in various oil and gas fields.

Accordingly, research and development MoUs have been signed with Russian firms like Lukoil, Tatneft, Zarubezhneft and Gazprom for expansion of seven Iranian oilfields including Mansouri, Ab Teimour, Aban, West Paydar, Dehloran, Cheshmeh Khoshk and Chenguleh.

Accordingly, Russian firms enjoy the highest rate of cooperation in upstream sector of Iran’s oil and gas industry as compared with Asian or European companies.

Nevertheless, names of Russneft, Tatneft and Zarubezhneft were missing on the recently-published list by NIOC giving rise to hypotheses that the three Russian oil giants had been disqualified.

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On cooperation between Tehran and Moscow over oil swap projects, Bijan Zanganeh said no talks were conducted in this regard during the recent visit to Iran of Russian Energy Minister Alexander Novak though relevant negotiations are underway with Lukoil company.

He further touched upon gas swap with Russia asserting “Gazprom is taking measures to join hands with Iran for gas swap purposes.

“During the recent visit of a Russian delegation to Tehran, talks were held over development of some Iranian oil fields and agreements were also signed.”

The official underlined that Russneft firm was seeking to collaborate with the Headquarters for Execution of Imam Khomeini’s Order (EIKO) to develop four oilfields including South Azadegan.

During visit of Russian economic and oil delegation, headed by Novak, to Tehran last week, the MoU for studying two oil fields of Cheshmeh Khoshk and Chenguleh in west of Iran were signed.

Accordingly, Iran’s Oil Minister Bijan Zanganeh reported on signing research and development MoUs with Russia for expansion of seven Iranian oilfields.

Russian Lukoil will be engaged in study on Mansouri and Ab Teimour, Russian Zarubezhneft will study Aban and West Paydar and Tatneft will study the Dehloran , while Gazprom will study Cheshmeh Khoshk and Chenguleh oil fields.

Meanwhile, one joint project likely to be implemented by the two sides is oil swap deal which has not reached conclusion and based on primary talks 150,000 barrels per day oil is slated to be swapped though the figure will eventually hit 500,000 barrels per day.

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Speaking during the 13th meeting of Iran-Russia Joint Economic Commission, Russian Deputy Minister of Energy Kirill Molodtsov touched upon major axes of talks between Iranian and Russian firms over oil, gas and energy industries saying “Russia’s Lukoil has commenced new exploratory activities in the Persian Gulf as well as conducting talks with the National Iranian Oil Company for development of oil and gas fields.”

He also recalled numerous proposals made by other oil giants of Russia like Gazprom, Tatneft and Russneft for participation in various sectors of Iran’s oil and gas industry asserting “Russian firms are fully ready to conduct maximum cooperation with the Iranian sides.”

“Three Russian companies have also joined negotiations for partnership in Iran’s power industry as regards project financing in thermal power plants.”

Molodtsov underlined that representatives of over 20 active companies of Russia had mulled over with Iranian counterparts in fields like oil, gas as well as transport of petroleum products; “new contracts are expected to be soon endorsed between both parties in case current talks are pursued.”

Deputy Russian energy minister also touched upon the cooperation agreement inked between National Iranian Gas Company (NIGC) and Russia’s Gazprom emphasizing “the deal mainly revolves around implementation of gas pipeline and storage projects.”

Also on the sidelines of the business forum, Deputy Iranian Commerce Minister Mojtaba Khosrotaj said the main outcome of talks between Tehran and Moscow was defining of a five-year cooperation plan with a focus of mines and industries.

He further reiterated that Iran and Russia had agreed to create balance in the volume of trade turnover between the two countries by signing into several new accords in a wide variety of arenas.

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The deals open the way for Gazprom to carry out studies at the Cheshmekosh and Changouleh fields near the border with Iraq, according to the Shana news agency, which is linked to the Oil Ministry, AFP reported.

That adds to five other oilfields that have already been earmarked for Russian firms Lukoil, Tatneft and Zarubezhneft.

The latest deal was signed by Russian Energy Minister Alexander Novak, who is visiting Tehran with a 590-strong business delegation.

Russia and Iran are keen to deepen their economic relationship.

Iran has announced a slew of energy deals with foreign firms in recent weeks, despite uncertainty around the incoming US administration of Donald Trump, who has vowed to take a more confrontational stance toward Tehran.

Last week, Anglo-Dutch giant Shell signed an initial accord to explore two of Iran’s largest oilfields at South Azadegan and Yadavaran, as well as the Kish gas field.

That followed an initial deal with France’s Total last month to develop part of the South Pars gas field – a project worth an estimated $4.8 billion.

But doubts persist over how these deals will be financed so long as Iran remains frozen out of the international finance system by continuing US sanctions.

The government has announced that Iran’s energy infrastructure urgently needs an infusion of foreign cash, technology and know-how.

Russia Keen to Participate in Iran’s Oil, Gas Projects
Russian Energy Minister Alexander Novak said on Tuesday that Moscow is keen to participate in Iran’s oil and gas projects.

He made the remarks in the Iran-Russia trade forum in Tehran.

Iran and Russia will continue cooperation in execution of development projects in the oil and gas sector, the official added.

He said that Iran and Russia will promote cooperation in construction of gas, electric and nuclear power plants.

Iran and Russia are keen to enhance all-out ties, Novak added.

He referred to removal of Islamic Republic’s sanctions and said the ground is now ready for Russia’s investment in Iran’s oil and gas projects.

The two countries enjoy good capacity for promotion of cooperation, Novak added.

He said that the volume of cooperation between the two states is increasing.

Iran and Russia enjoy longstanding cooperation in energy fields and they can work together in fields of construction of nuclear, electric and gas power plants, the minister added.

He said that central banks of Iran and Russia have taken good steps forward resolution of banking problems.

Russia will cooperate with Iran to develop its Bushehr Nuclear Power Plant and electrify its railroads, Novak added.

He said Moscow is ready to sell superjet planes to Iran.

National Iranian Gas Company (NIGC) and Russian Gazprom Neft on Tuesday signed a Memorandum of Understanding (MoU) for cooperation.

Managing Director of the NIGC Hamid-Reza Araqi and Deputy Managing Director of Gazprom Alexander Medvedov signed the deal in the presence of Iran’s Minister of Communications Mahmoud Vaezi and Russian energy minister.

The two sides decided to form five working group with regards to the extent of the working fields. The working groups corresponded and held talks on trade of gas, R&D, production and implementation of the joint projects and gas application.

In the meeting, the projects of investment in Iran were outlined and it was announced that Iran is ready to absorb more than 62 billion dollars investment in the NIGC projects in the coming years.

With lapse of almost one year since the first working session, the two sides signed the MoU based on outcome of their expert sessions.

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