In remarks at a Tuesday meeting of a headquarters planning a surge in domestic production, Bijan Namdar Zanganeh said an Iranian company will resume drilling in the phase 11 of South Pars gas field which has remained unfinished after Total and the CNPC left the project.

The oil minister said it is high on the agenda of the administration to complete the South Pars gas field projects, adding that completion of 17 phases of the field will lead to production of 750 million cubic meters of gas.

Zanganeh also said the Oil Ministry expects to bring 17 petrochemical plants into operation in the current Iranian year, which began four weeks ago, noting that the new plants will produce $6 billion worth of new products.

In July 2017, French company Total signed a $1 billion deal to develop the South Pars gas field in cooperation with China National Petroleum Company (CNPC) and Iran’s PetroPars.

But the French pulled out of the deal in May 2018 in light of a decision by US President Donald Trump to pull his country out of the 2015 Iran nuclear deal and impose sanctions on Tehran.

Later, the CNPC formally replaced Total in the project, but it suspended investment in Iran later in December 2018 in response to US pressures.

The investment halt followed four rounds of talks between Chinese officials and senior US authorities who urged CNPC to refrain from injecting fresh financing in Iran.

South Pars is the world’s largest gas field.

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The South Pars field deal, struck in the wake of Iran’s 2015 nuclear deal with world powers, appears to be just the latest business casualty of America’s pressure campaign on Tehran following President Donald Trump’s unilateral withdrawal of the US from the deal. Chinese state oil firm has quit it’s share in South Pars development, Iran News reports.

It also comes as China and the US engage in their own trade war, as Beijing and Washington levy billions of dollars of tariffs on each other’s goods.

Oil Minister Bijan Zangeneh, quoted by the ministry’s SHANA news agency, said on Sunday that the China National Petroleum Corp was “no longer in the project.”

He did not elaborate or give any reason for the withdrawal, though SHANA said the company “had pulled out of a contract” to develop the field.

Officials in Beijing did not immediately acknowledge their decision. Phone calls to the CNPC rang unanswered on Sunday and its website bore no mention of the withdrawal.

However, Iranian Foreign Minister Mohammad Javad Zarif separately complained on Sunday about the US campaign against Tehran and its impact on foreign investments.

“We have been facing plenty of problems in the field of investment because of the US maximum pressure policy,” Zarif told a parliamentary committee, according to the semi-official Tasnim news agency. “We are trying to remove the problems.”

With Total’s withdrawal, CNPC had taken over the French firm’s stake. Now Petropars will develop the field alone, Zangeneh said.

Total first pulled out of Iran in 2006 as United Nations sanctions first took hold over fears Iran’s atomic programme would be used to build nuclear weapons. Tehran has maintained its programme is only for peaceful purposes.

Iran cancelled another CNPC contract in 2012 amid increasing international sanctions which led to the 2015 nuclear deal.

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CNPC International is one of the two members of a consortium to develop the project along with Iran’s Petropars. France’s Total was also in the consortium before it pulled out of the project due to US sanctions on Iran’s oil industry.

“Arrangements have been made to begin developing the project this [calendar] year under any circumstances. We will be able to speak more definitely in two months,” he told Shana.

The official said he would disclose more information about the project in the coming weeks, adding that the capabilities of Iranian companies were incomparable with the time South Pars development had started back in 2002.

“Undoubtedly, Petropars has the qualities needed for developing the first phase of the project.”

Aban and West Paydar

Dehghan said that the contract for developing Aban and West Paydar oilfields was progressing and so far, four joint management committees had been held concerning the projects.

He further said that the Supreme Economic Council had signed off on developing Sepehr and Jofeir fields and implementation of their contract would start within days. Moreover, contracts of Cheshmeh Khosh, Dalperi and East Paydar fields would be enforced this calendar year and their development would begin afterwards.

Talks on the Go

Dehghani said that NIOC’s talks with domestic and foreign companies were continuing despite US’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA), a nuclear deal Tehran struck with the P5+1 group of countries back in 2015.

In the calendar year of 1397 which ended on March 20 2019, NIOC signed a total of 12 study MoUs with Iranian and foreign companies, which would lead to signature of several contracts by the end of this calendar year, he added.

The official said studies valued at roughly $150 million were being carried out for NIOC under the over 100 MoUs it signed with numerous companies in the aftermath of the nuclear deal.

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The pipelines will transfer gas from Kish field to South Pars and Fajr Jam refinery in future, he added.

The other PGOC priority in the current year is conducting negotiations with Indians and some other companies about Farzad B field to reach an agreement with them, according to Mashkinfam.

In late May, 2019, Iranian Oil Minister Bijan Namdar Zanganeh said that sanctions are a likely reason preventing Chinese from starting cooperation with Iran on completion of phase 11 of the South Pars gas field.

He said that the Chinese have recently left Iran but talks are under way with them over completion of phase 11 of South Pars.

Explaining that Iranian companies cannot complete phase 11 by themselves he added that “the head of the consortium is a Chinese company with an-80-percent stake in the project, thus the Chinese should announce readiness for completion of the phase; however, sanctions are probably preventing them from doing so.”

The 11th phase of the South Pars contract was signed between National Iranian Oil Company (NIOC) and a consortium of France’s Total, China’s CNPC International and Petropars Company in Tehran on July 3, 2017.

Based on the $4.879 billion deal, Total was operator of the SP11 project with a 50.1 percent interest, in partnership with Chinese state-owned oil and gas company CNPC (30 percent), and NIOC subsidiary Petropars (19.9 percent).

SP11 is to be developed in two phases. The first phase, set to cost around $2 billion, comprises 30 wells and two wellhead platforms connected to existing onshore treatment facilities by two subsea pipelines.

Depending on reservoir conditions as production progresses, offshore compression facilities could be added, a first on the South Pars field.

Following US’s imposition of sanctions on Tehran after a May decision by Washington to pull out of the Iran nuclear deal, Total announced it would no longer stay in the SP. 11 contract and its stocks were automatically transferred to the Chinese side of the deal as it is stipulated in the contract.

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Under the terms of the agreement to develop phase 11 of South Pars, the world’s largest gas field, CNPC could take over Total’s 50.1 percent stake and become operator of the project if Total is forced to withdraw from Iran, a senior Beijing-based source with knowledge of the joint-venture agreement said.

A consortium comprising France’s Total, China’s CNPC International and Petropars Company from Iran signed contract with the National Iranian Oil Company (NIOC) for developing phase 11 of the supergiant South Pars gas field, with CNPC owning a 30 percent stake and Petropars holding the remaining 19.9 percent.

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