Iran on Wednesday signed a Heads Of Agreement (HOA) with London-based Pergas Consortium, a group of international oil and gas companies, to develop the Karanj oilfield in southwestern Iran.
According to a report on the Iranian Oil Ministry’s official news website, Shana, the document was signed at a ceremony in Tehran with Iranian Oil Minister Bijan Zangeneh, National Iranian South Oil Company (NISOC) CEO Bijan Alipour, British Ambassador to Tehran Robert Macaire, and Colin Rowley, Pergas managing director, in attendance.
Also known as a letter of intent, a HOA is a tentative, non-binding document signed ahead of a final contract.
“We hope that the governments of the U.K. and other European companies that sign a deal with Iran endorse the agreements,” Zangeneh said at the ceremony.
The minister underlined that Iran could not be removed from the energy market, Shana said, adding Zangeneh advised neighboring countries not to “relish” Iran’s current status saying “the present circumstances will pass by and we will emerge a winner”.
“We will make every effort to maintain our production capacity and continue our exports,” he added.
The HOA is the first such contract after the U.S.’ recent withdrawal from the Iran nuclear deal, and President Donald Trump’s call to reinstate sanctions against the country.
It was also signed the same day Total announced that it would “not be in a position to continue” the South Pars 11 gas development project in Iran and would “have to unwind all related operations before Nov. 4, 2018 unless Total is granted a specific project waiver by the U.S. authorities with the support of the French and European authorities”.
It said the decision was taken “as a consequence” of Trump’s May 8 announcement to pull out of the nuclear deal known as the JCPOA, and re-impose sanctions against Tehran.
“In these circumstances, Total will not take any further commitment related to the South Pars 11 project and, in accordance with its contractual commitments vis a vis the Iranian authorities, is engaging with the French and U.S. authorities to examine the possibility of a project waiver,” a press release said.
The French oil giant confirmed that its actual spending to date with respect to the South Pars 11 contract -- which was signed in 2017 to develop phase 11 of the field with an initial investment of $1 billion-- was less than €40 million ($47.2 million) in group share, and a withdrawal would not impact its production growth target of 5 percent compound annual growth rate between 2016 and 2022.
Talking to reporters after the signing ceremony of the agreement with Pergas, Zangeneh said the Chinese National Petroleum Company (CNPC) would take over Total's stake in the project, if Total failed to secure the waiver from Washington, Shana reported.
The minister added that in case the CNPC decides to withdraw too, the other party of the contract, Iran’s Petropars, would replace it as the major developer of the project confirming, "the project will certainly not be halted".
Asked whether Total would be fined for pulling out, Zangeneh said: “There is no discussion of fining, but the amount Total has invested in the project so far will not be repaid to it for now.”
According to Shana’s report, provided the HOA leads to a final contract, its implementation would bring the Karanj oilfield’s daily crude oil production capacity to 200,000 barrels per day (bpd) from 120,000 bpd and a total of 655 million barrels over a 10-year period.
Located 110 kilometers off southeastern Ahvaz, the southwestern province of Khuzestan, and discovered in 1962, the field is estimated to hold 11 billion barrels of in-place oil, Shana said, adding an estimated direct investment of $167 million and an indirect investment of $187 million had been envisaged for developing the brownfield.
By Hale Turkes
Anadolu Agency
energy@aa.com.tr