MADRID Ė French energy giant Total SA said it will sign a deal that completes a $1 billion investment in a giant Iranian gas field, capping months of negotiations over the first big move by a Western oil company into the country in years, according to a report from Dow Jones Newswires.
Total will be the lead operator in a partnership with China National Petroleum Corp. and Iranís Petropars to develop South Pars, a gas field under the Persian Gulf, one of the worldís largest.
Iranís oil ministry said the contract would be signed Monday afternoon.
The Paris-based oil giant has led the charge to return to the oil-rich country since Western sanctions over its nuclear program were lifted.
Mondayís deal will be the culmination of months of negotiations after Total signed a preliminary $4.8 billion agreement to develop the giant gas deposit alongside its partners late last year.
Total Chief Executive Patrick Pouyanne has indicated the first $1 billion to be pledged on Monday would go toward funding the projectís first phase.
Total said the gas from the Pars field will supply the domestic market from 2021.
The company had been in talks with Iran to create the countryís first liquefied natural gas export system but they could not agree on a gas price, people familiar with the matter said.
International oil companies have been slow to re-enter Iran following a landmark deal with world powers in 2015 that lifted many Western sanctions on Tehran.
The energy business remains politically fraught in a country that needs international investment to develop its resources but also sees oil and gas as a vital national asset that should not be turned over to foreigners, Dow Jones added in a report supplied to EFE.
With US sanctions over terrorism, weapons and human rights still remaining, many banks have refused to deal with Iran, and Tehranís hard-liners have pushed back against attempts by President Hassan Rouhaniís administration to sweeten the terms for international oil companies in Iran.
Totalís Anglo-Dutch rival Royal Dutch Shell PLC has also signaled interest in returning to Iran.
In December, it signed a preliminary deal to explore future projects in the country but has yet to make a more concrete commitment.
A Total spokesman said its planned investment would remain in strict compliance with all applicable sanctions and regulations.
Totalís deal will be the first Iranian Petroleum Contract signed in Iran, and the company said the 20-year contract came ďwith very attractive commercial terms,Ē without disclosing more details, but the dealís time frame is longer than the five-year deals Iran previously allowed.
Foreign companies had frequently complained they were unable to recoup their investments in prior contracts signed in the 1990s because Iran set fixed amounts for project costs.