Iran signed a deal with France's oil exploration firm Total to develop a major offshore gas field, the French company said on Tuesday.
It is the first big contract with a Western energy company since the lifting of sanctions on Iran in January 2016 under a nuclear deal with world powers.
One of the seven biggest oil companies in the world, Total is a France-based multinational oil and gas company that also manufactures chemicals. The company will be leading a consortium that includes China National Petroleum Corporation and Iran’s Petropars, a subsidiary of the National Iranian Oil Company (NIOC).
— Total (@Total) November 8, 2016
The Phase 11 development of South Pars in the Gulf is known as SP11. The first of two stages of progress, Total says, will cost an estimated $2 billion. The total investment, according to head of Middle East exploration and production, Stephane Michel, will be $4.8 billion.
Total previously helped develop Phases 2 and 3 of South Pars until the declaration of international sanctions on Iran led the company to cease all activity there.
Michel added Total and NIOC have signed a memorandum of understanding in Tehran on November 8, and the final agreement would be signed in early 2017.
SP11’s output, expected to be 370,000 barrels of oil per day, will be fed into Iran’s gas network.
Total’s Chief Executive Officer Patrick Pouyanne said the agreement “resulted in an attractive commercial framework” and that the project “fits with the group’s strategy of expanding its presence in the Middle East, where the origins of the group lie, and growing its gas portfolio by adding low unit cost, long plateau gas assets.”