July 3 (UPI) -- Monday is a "huge day" for the Iranian energy sector, an analyst said after it signed off on its first offshore contract with a foreign company in a decade.
A consortium of French energy company Total, China National Petroleum Corp. and Petropars Ltd., a subsidiary of the state-run National Iranian Oil Co., signed a 20-year contract to help develop parts of the giant South Pars natural gas field in the Persian Gulf.
"Today is a huge day for Iran's oil and gas industry, as the country signs its first-ever international petroleum contract, and seals its first upstream contract with foreign firms, in 10 years," Homayoun Falakshahi, a senior research analyst at Wood Mackenzie, said in an emailed statement.
Wood Mackenzie estimates developing Phase 11 of the South Pars field will require about $5 billion in investments and yield about 10 trillion cubic feet of natural gas.
The project will be developed in two phases, with about 30 wells and $2 billion slated for the first development effort. Offshore facilities, including a platform for field compression, opens South Pars up for additional development and, at 20,000 tons, will be the largest platform of its kind ever installed in the Persian Gulf.
The French company will serve as the operator of South Pars Phase 11 with its 50.1 percent stake in the project. Petropars is the minor shareholder in the consortium with a 19.9 percent stake.
"This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country," Chairman and CEO Patrick Pouyanné said in a statement.
Iranian Energy Minister Bijan Zangeneh met on the sidelines of a multilateral conference steered by the Organization of Petroleum Exporting Countries with Pouyanne in March. In November, Total signed a head of agreement deal with the National Iranian Oil Co. to help develop phase 11.
European majors are warming to Iran in the post-sanctions environment. Austrian energy company OMV in late January hosted representatives from Iran's Dana Energy Co., a player in exploration and development, to sign of new arrangements for potential work.
With Iranian President Hassan Rouhani, who helped steer the post-sanction economy, earning a second term in office earlier this year, the oil minister said the path was cleared for future investments from foreign energy companies.
"As well as hard work, this achievement highlights the administration's pragmatic approach to negotiations, particularly within Iran," Wood Mackenzie's analyst added.
All of the natural gas from Phase 11 is slated for the Iranian economy, the world's third largest gas market.
Petropars Ltd. is under sanctions pressure from the United States.