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grid, and marks a breakthrough in the Oil Ministry’s efforts to attract Western investment and know-how to improve its outdated energy infrastructure.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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The Persian daily, Iran, quotes Michel as saying that in the wake of lifting the sanctions and implementation of the Joint Plan of Action (JCPOA), Iran’s international relations have undergone major change.

The ice of economic and commercial relations between Iran and other countries in the years of sanctions are getting melted.

He said that the oil industry, standing as the most important source of income for Iran, was one of the Iranian economic sector which suffered from the sanctions.

Under sanctons, oil production fell down due to restrictions on oil exports due to lack of proper and timely investment to the extent that export of gas lowered to less than one million bpd from more than 2.2 million bpd.

However, good predictions were envisaged for the propspects of Iranian oil economy were made in 2014.

In addition to reforms in government’s macro policies, which led to considerable growth in oil production even before lifting the sanctions, new atmosphere was created for return of investors and oil giants to Iran.

From the early days of the the nuclear deal, directors of the the international companies active in oil industry visited Tehran along with their respective country’s economic delegations and voiced interest in resumption of the ties cut-off for years.

Officials of the most reputable European oil companies held talks with Iranian officials.

Total SA of France, the world’s fourth major oil company that signed four contracts with Iran in the years prior to sanctions, is willing to come back to Iran.

The subject of the first contract is purchase of 160,000 bpd oil from Iran by Total, indicating the company’s interest.

In the post-sanctions era, Total team of experts and senior officials visited Iran four times following up issues of mutual interest.

This time reporters went to the 46-storey building of Total in Paris to hold talks with the senior officials.

Michel took part in the Q&A session with reporter of the Persian daily of Iran.

During the interview, the senior director of Total said that the French company is highly willing to return to Iranian oil industry.

He said that all the world oil giants have got prepared for entering Iranian oil industry and are competing with each other.

Michel said Total team of managers set two main conditions for resumption of ties with Iran and that fortunately two of the conditions have been met.

The first condition of Total was elimination of international sanctions on Iran, that was met in January 2016, and now all sanctions are lifted.

The second condition was related to oil contracts. According to the Total official, Iran’s previous contracts, which was the basis of cooperation with foreign companies, was based on the buy-back model, being less beneficial for the foreign party.

For this reason, foreign companies had called for amendment of Iranian oil contracts.

Of course, Iranian government had prior to the sanctions lifted, decided to attract foreign investment.

After months of debate and approval of the new model of oil contracts, the so-called IPC, the contracts were finalized and published.

In an interview with Iran, Michel reiterated Total’s willingness for presence in Iranian oil industry.

‘We are fully prepared for beginning projects and signing contracts with Iran. We are only waiting release of the new oil contracts to foreign companies. Total is ready for cooperation in oil production and exploration, willing to enter Iranian petrochemical industry.’

The Total of France official said that the contract for joint production of engine oil, signed several years ago between a private Iranian company and Total, will be activated.

The gas industry is also one of the main priorities of Total for investment in Iran.

Of course, the point Michel is stressing is transfer of the technical and engineering know-how.

The director said the MoU signed between Iranian Ministry of Petroleum and the company was enforced during visit of Iranian president to Paris.

He added that since the deal was signed, Total team of experts launched needs assessment job on the projects for cooperation, amount of investment and the technology.

Noting that Iran is a big country and is an influential player in energy for enjoying giant oil and gas reserves, Michel said Total SA of France can meet part of the investment needed for the oil projects, in parallel with transfer of technology and know-how.

He noted that of course, due to the world’s economic recession over the past several years, investment has been on the downward trend so far.

iIn 2014, Total SA of France made more than 28 billion euros investment and it is predicted that the figure will rise to 15 billion to 17 billion euros in 2017. /IRNA

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