Total says CNPC has right to replace its lead on Iran project

The French major had planned to invest $4.8bn in a gas venture which has been put into jeopardy because of US sanctions against Tehran

Total's attempts to secure waivers from the White House failed, forcing it to walk away from its $5bn venture in Iran. Reuters

French oil major Total said on Monday its exit from a $4.8 billion Iranian gas project was “ongoing” and that co-investor China National Petroleum Corporation had the right to take over its position.

“The contractual process is still ongoing and for our part, we have not been informed of an official CNPC position, but as we have always indicated, CNPC, a Chinese state-owned company, has the right to take over our participation if CNPC decides it,” Total said in a statement.

CNPC could not be reached for comment.

The $4.8bn agreement between Total, CNPC and local firm Petropars to develop phase 11 of South Pars, the world’s largest gas field, has been left in disarray following the US decision to impose sanctions on Tehran.The US introduced the first phase of sanctions over Tehran on August 6, with the full implementation targeting Iran’s energy industry set to come into force on November 4.

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The phasing of sanctions has left Total, the biggest foreign investor in the beleaguered Iranian energy sector since the 2016 nuclear deal, scrambling for an exit, as initial attempts by the French oil company to secure waivers from the White House have not materialised.

On Saturday, conflicting reports emerged from two separate Iranian news agencies on the handover of the project to CNPC. An official of the state-owned National Iranian Oil Company's (NIOC) was cited by two news agencies, IRNA as well as the energy-focused Shana as offering contradictory comments on the status of Total in the project. The former quoted Mohammad Mostafavi, NIOC director for investments, as saying that CNPC had replaced Total as lead investor while Shana followed up with a story that there had been no change in the existing status quo.

However, analysts familiar with the Iranian hydrocarbons industry and decision-making suggested the discrepancy stemmed from the fact that Total was already in the final stages of its exit from Iran, but has to wait for official confirmation.

It was also an early indication that CNPC would likely remain committed to its Iranian investments, despite the looming threat of US sanctions.

Iran sits atop the world’s second biggest gas reserves after Russia, but is still reliant on imports from neighbouring Azerbaijan and Turkmenistan to help cope with harsh winters since its domestic infrastructure cannot meet rising local demand.