Iran signed a deal Monday with France’s 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. The $5 billion agreement is the first energy deal between foreign companies and Iran since Tehran signed the landmark nuclear deal with the U.S. and other world powers 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 constructing offshore compression facilities. The project’s goals is to process 2 billion cubic feet of natural gas each day, the equivalent of about 400,000 barrels of oil. Total will have 50.1 percent stake in the deal, with CNPC taking 30 percent, and Petropars, a subsidiary of the state-run National Iranian Oil Company, 19.9 percent.
“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 Monday. “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 criticized 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 program. 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 Monday 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 billion in investments to make up for time lost during the sanctions, and he invited U.S. companies to make offers.