Total denies South Pars development deal with Iran

Total CEO Christophe de Margerie has denied Iranian and Western media reports that Total will sign an agreement with Iran before Mar. 20 to develop the next phase of South Pars gas field.

Feb 23rd, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 23 -- Total SA Chief Executive Officer Christophe de Margerie has denied Iranian and Western media reports that his firm will sign an agreement with the Iranian government before Mar. 20 to develop the next phase of South Pars gas field.

"If it was true I would know about it," De Margerie told reporters. "I don't know why they made this announcement," he said, adding, "We continue to negotiate with them."

On Feb. 18, the official Islamic Republic of Iran Broadcasting reported that Total SA would sign a $5 billion contract with Iran by Mar. 20 to develop Phase 11 of South Pars. The report was picked up by other Iranian media, as well as Western news outlets.

"The main subject of negotiations (between Iran and Total) was on South Pars Phase 11; (these negotiations) are currently about to be concluded,' IRIB reported, citing the head of National Iranian Oil Co., Seifollah Jashnsaz.

"According to this contract, France's oil company Total will undertake the development of the upstream sector of South Pars Phase 11 and will build…LNG plants for the downstream sector," Jashnsaz said, according to IRIB.

According to the IRIB report, citing Jashnsaz, Royal Dutch Shell PLC and Respol YPF SA also have come forward for new discussions with Iran.

"Italy's oil company Eni is in active talks over the development of Phase 3 of Darkhovin oil field. Discussions with Eni will conclude in a contract by the end of the (Iranian) year [Mar. 20] or by the beginning of next year," Jashnsaz added, according to IRIB.

IRIB said Iran also has begun natural gas talks with Germany's E.On AG. This company's main purpose [in negotiating with Iran] "is to invest in the Iran LNG project and then to invest in Iran's remaining gas fields," IRIB quoted Jashnsaz as saying.

Further development of South Pars has been pending for nearly 5 years since an initial agreement to undertake the project was signed in 2004 between Total, National Iranian Oil Co., and Malaysia's Petronas.

The delay was caused mainly by international concerns about Iran's interest in sensitive nuclear activities.

Led by the US, Western governments, suspicious of Iran's alleged pursuit of nuclear weapons, have pressed international firms to cut ties with Iran.

In July 2008, De Margerie told international news channel, France 24, that the South Pars project had been "de facto frozen" as far as Total was concerned and would not resume until Iran's relationships with the rest of the world improved.

"It is out of the question to stop that project; it is out of the question to renounce it or to abandon it, but (it is) necessary to wait for things to improve, for Iran to get better relationships with its neighbors," De Margerie said.

"We decided not to decide," said De Margerie. "We want to retain long-term relationships with our Iranian partner," adding that Total had not been pressured by the French state to drop the South Pars project.

In September, De Margerie reiterated his firm's intention of remaining in Iran, telling Le Figaro newspaper: "We are still in Iran and want to stay in Iran…because…Iran is the world`s greatest country in terms of gas and oil reserves."

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