China National Petroleum Company (CNPC) plans to take over Total’s stake in Iran's South Pars gas field if the French energy giant fails to stick to its contract with Tehran due to new US sanctions, a report said.
CNPC officials have held internal talks in recent weeks to discuss the implications of taking control, according to three industry sources briefed on the talks, Reuters reported.
Total signed the $1 billion deal to develop the South Pars gas field in July.
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.
CNPC has a 30 percent stake, while the Iranian national oil company’s subsidiary PetroPars holds the remaining 19.9 percent.
Total faces losses of several tens of millions of dollars if it pulls out of the project.
The deal was the first major Western energy investment in the Islamic Republic since anti-Tehran sanctions were lifted following the 2015 nuclear deal between Tehran and world powers.
On October 13, US President Donald Trump refused in to certify that Tehran is complying with the deal, kicking the ball into the court of Congress.
According to a law enacted by Congress in 2015, the president must certify every 90 days that Iran is honoring the deal. Trump, in the early days of his administration, twice formally certified Iran’s compliance, but he clearly chafed at seeming to endorse an agreement that he harshly criticized on the campaign trail last year.
On December 14, the US Congress missed a deadline for taking action on the nuclear deal, ignoring Trump’s demands for a harder line on the agreement.
Now Trump should decide either to stay in the deal or not. Experts believe that he will pull the United States out of the deal entirely when it comes up for review on January 13.
Iran and the Group 5+1 (Russia, China, US, Britain, France, and Germany) on July 14, 2015, reached a conclusion over the text of the JCPOA (Joint Comprehensive Plan of Action).
The accord took effect in January 2016 and was supposed to terminate all nuclear-related sanctions against Iran all at once, but its implementation has been hampered mainly due to US policies.