Concern over painfully slow progress of Total’s Iran investment against Trump backdrop

Concern over painfully slow progress of Total’s Iran investment against Trump backdrop
What's on the horizon for South Pars?
By bne IntelliNews October 31, 2017

An Iranian MP has questioned why French energy major Total is moving so slowly with its major investment in the South Pars gas field in the Persian Gulf, Tasnim News Agency reported on October 31.

The deal, also involving China National Petroleum Corporation (CNPC) and signed in early July, is very much seen as a flagship transaction in Iran's efforts to usher in a new era of big foreign investment. Such investment was made possible by the lifting of crippling economic sanctions against Tehran with the introduction of the multilateral nuclear accord at the start of 2016. But there are fears that Total is treading very gingerly given the growing hostility being shown by US President Donald Trump towards the nuclear agreement and Iran's influence in Middle East affairs.

The MP who has sparked concerns is Hedayatollah Khademi, deputy head of the Iranian Majlis (parliament) energy commission. He expressed apprehension over Total having not made any real progress with the South Pars investment since the key government body approved the deal in August.

“Total should not make any excuses at all for refusing to carry out the contract,” he told Tasnim, a news agency linked to the Islamic Revolutionary Guard Corps (IRGC) and thus hardliners.

On October 27, Reuters quoted a Total representative as saying that the main contract for the development of the 11th phase of South Pars gas field—the largest gas field in the world and shared with Qatar—would be awarded in 2018 after Trump has issued final approval. That might be taken to mean a point after the US president has made the decision to not further interfere with the nuclear deal, something he has warned he might not do if the accord is not fixed to his liking.

It is no surprise to see hardliners, who are opposed to “imperialist” foreigners doing major business in the Islamic Republic, attack the investment, even though it might eventually have a value of up to $5bn. But the project delays are now prompting more centrist voices to make themselves heard, with complaints directed at how slowly Total is bringing technicians and the actual investment flow into the country.

Khademi said that Petroleum Minister Bijan Namdar Zanganeh will be called to parliament to offer his explanation for project hold-ups.

Total has a 50.1% stake in the 20-year deal and has said it will put in an initial investment of $1bn. State-owned CNPC has a 30% stake, while Iranian government-owned Petropars has a 19.9% holding.

South Pars covers an area of 9,700 square kilometres, of which 3,700sq km belongs to Iran.