* French giant strikes big with $5 bln deal in Iran *
Total SA, the French energy giant that signed a $5 bln deal in partnership with China National Petroleum Corporation (CNPC) to develop the colossal South Pars offshore field for Iran, said that it is going ahead with its exploration programme within the Cyprus Exclusive Economic Zone.
The drilling in the ‘Onisiforos’ gasfield in Block 11 is expected to commence as planned “within July” in co-operation with joint venture partner ENI of Italy.
For that reason, Total E&P Cyprus General Manager Yves Grosjean said that the “West Capella” drillship is on its way to Cyprus and is expected to arrive on July 12, to carry out testing prior to drilling at the ‘Onisiforos’ site. The tests are expected to last less than a week, the French official said.
The announcement puts an end to political hysteria that exploration would be put on hold due to the ongoing Cyprus Conference in Crans Montana, because of pressure and threats from Turkey that continues to claim part of the Cyprus EEZ and wants all revenues shared with the Turkish Cypriot community prior to any solution.
Grosjean said that the depth of the drilling is expected to reach 3,500-4,000 metres and will last 2-3 months. The preliminary results are expected some time between September and October.
On June 26, the Cyprus government issued a directive to seafarers (NAVTEX 240/17), saying that drilling operation will be conducted in an area bounded by the drilling ship “West Capella”, from July 10 to October 15.
The license for Block 11 was awarded to Total back in 2013 at the conclusion of the second international bid round held. Total decided to extend the lease of Block 11, re-evaluating its geophysical model in view of the discovery of Egypt’s giant Zohr field a mere 6km away from the boundary of Block 11.
Biggest deal after Iran sanctions lifted
Meanwhile, on Monday, Iran signed a deal with Total SA and China’s state-run China National Petroleum Corporation (CNPC) to develop the South Pars offshore field, one of the world’s largest natural-gas fields, according to a report in The Atlantic.
The $5 bln agreement is the first energy deal between foreign companies and Iran since Tehran signed the nuclear deal with the U.S. and the other permanent members of the UN Security Council in July 2015, a move that was followed by the lifting of certain sanctions against the Islamic republic.
The contract, which was signed in Tehran, is for 20 years, and involves 20 wells, two wellhead platforms, and to connect two existing facilities by underwater pipeline. A second phase includes building offshore compression facilities. The project’s goals is to process 2 bln cubic feet of natural gas each day, the equivalent of about 400,000 barrels of oil. Total will have 50.1% stake in the deal, with CNPC taking 30%, and Petropars, a subsidiary of the state-run National Iranian Oil Company, 19.9%.
“This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country,” Total’s CEO, Patrick Pouyanné, said in a statement. “Total will develop the project in strict compliance with applicable national and international laws.”
Total had previously worked on the oil field, but pulled out in 2006 when sanctions were imposed against Iran over its nuclear program, which critics said was being used to develop nuclear weapons—a claim Iran denies.
In 2015 the Obama administration negotiated limits on uranium enrichment and, in exchange, helped lift certain sanctions placed against Iran. President Trump criticised the agreement as the “worst deal ever,” but in May his administration renewed a waiver that upheld key portions of Obama’s deal. At the same time, however, the Trump administration placed economic sanctions on several individuals and business it said were involved in human-rights abuses or were working with the country’s ballistic-missile programme. Total’s deal will likely give France and China negotiating power to pressure the Trump administration to leave the Iran nuclear deal intact.
Hossein Amiri Khamkani, a member of Iran’s parliamentary committee on energy, said on Monday that the deal “breaks the taboo of American sanctions and opens the way for other companies.”
Since the sanctions lifted, Iran has also signed deals with U.S.-based Boeing and its European rival, Airbus, both for contracts to buy aircraft. The agreement with Boeing was the first major deal by a U.S. company since Iran’s revolution in 1979.
On Monday, Iran’s oil minister, Bijan Zanganeh, said the country needs $200 bln in investments to make up for time lost during the sanctions, and he invited U.S. companies to make offers.
