Updated Nov. 7, 2016 9:53 a.m. ET
Iran is set to sign a preliminary deal with Total SA Tuesday to help develop an offshore gas field, the first under its new oil-contract framework with a foreign company, an oil-ministry official in Tehran said Monday.
The agreement with the French oil giant is a key step toward the return of Western companies to the Islamic Republic’s giant fields, after a nuclear agreement with world powers ended international sanctions on its oil industry in January.
The so-called “heads of agreement” to develop phase 11 of the giant South Pars gas field will also include China National Petroleum Corporation and Iran’s state-owned Petropars, and will represent an investment of $6 billion, a press official at the oil-ministry said. Representatives for Total, CNPC and Petropars didn’t immediately respond to requests for comment
Total and CNPC both signed deals years ago to develop the project, before sanctions forced them to pull out.
The agreement will be under a new contractual framework which foresees more flexibility in recovering costs and a longer involvement in projects than previous deals. The official said the partners will have six months to complete the deal.
The South Pars field, which is shared by Iran and Qatar in the Gulf, contains 14,000 billion cubic meters of gas—8% of the world’s known reserves.
—Inti Landauro contributed to this article.
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