Iran oil minister plays down total's exit from binding gas deal
Iranian Oil Minister Bijan Namdar Zanganeh says Total S.A.'s contract with Tehran to develop Phase 11 of the South Pars Gas Field is "legally binding" and the French energy major cannot walk away from the deal under normal circumstances.
Zanganeh made the remark on Saturday on the sidelines of a meeting with Alisher Sultanov, Uzbekistan's deputy prime minister, in response to statements that the gas deal with the world's fourth biggest oil company could hit a roadblock.
"It is regrettable that some people still desire Total to break its agreement," Zanganeh said, noting that those who have opposed the deal from the beginning try to purposefully mistranslate the news about Total's presence in Iran to sow uncertainty in the public and prove that the deal would not be successful.
Pointing to the terms of the contract, the official noted, "As per the agreement, the French major can cancel the deal only if the United Nations Security Council imposes new international sanctions against Iran."
According to Zanganeh, it is unlikely that the French giant abandons the project. Based on the terms of the contract, Total's revenue is contingent upon gas production from Phase 11. Therefore, as long as the project is not fully implemented, they will earn no money.
"Total has started implementing the gas project in the Persian Gulf and more contracts are being planned," he said.
"Because Phase 11 agreement has been signed under the new Iran Petroleum Contract model, in case Total terminates the deal unilaterally, it must pay compensation," Behrouz Nemati, the spokesperson of Majlis Presiding Board said.
Total CEO Patrick Pouyanne said last week that his company will try to push ahead with the South Pars project if the US decides to impose unilateral sanctions, adding that Total will comply with any law that obliges it to withdraw from Iran.
Total, one of the world’s seven supermajors, signed a $4.8 billion contract in July to develop Phase 11 of the giant South Pars Gas Field that is shared between Iran and Qatar in the Persian Gulf.
The French oil and Gas company will collaborate with China National Petroleum Corp and Iran’s state-owned firm Petropars to produce 2 billion cubic feet, or 56 million cubic meters per day of natural gas from SP Phase 11.
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