Iran Signs Natural Gas Deal with France and China

Iran signed a 20-year deal with France’s Total SA and state-owned China National Petroleum Corp. to develop its offshore natural gas field.

The firms will develop a portion of the South Pars offshore field that Iran shares with Qatar. Qatar calls the same area the North Field.

The project will have a production capacity of 2 billion cubic feet per day or 400,000 barrels of oil equivalent per day including condensate. The produced gas will supply the Iranian domestic market starting in 2021.

Total has a 50.1% in the new Iran deal. China National has 30% stake, and Iran’s Petropars has 19.9%.

The $2 billion development at phase 11 of the South Pars field will see 20 wells and two wellhead platforms built and connected to existing facilities by two underwater pipelines, Total says in a statement. A second phase will involve the construction of offshore compression facilities.

During the ceremony, Iranian Oil Minister Bijan Zanganeh was reported as saying it will lead to “more than $5 billion in foreign investments.” He also described it as “one of the outcomes of the nuclear deal and recent presidential election,” which saw moderate President Hassan Rouhani re-elected over a hard-line challenger.

Zanganeh also said his country needs some $200 billion of investments in its oil industry in the next five years to make up for time lost during sanctions. Iran hopes to produce 6 million barrels of crude oil and condensates a day in five years, up from some 3.6 million today.

Iran sits atop the world’s fourth-largest oil reserves and the second-biggest stores of natural gas.