Sanctions Impact: China to Obtain Majority Stake in Iranian Gas Field

The United States’ decision to impose sanctions on Iran’s energy industry has impacted plans to develop phase 11 of South Pars—the world’s largest gas field. Concerning its expected exit from the $4.8 billion project, French oil major Total says that co-investor China National Petroleum Corporation has the right to take over its position.

Total was first Western oil major to sign energy deals with Iran after previous sanctions over that nation’s nuclear power program were lifted at the start of 2016. Total holds a 50.1% stake in the South Pars project, partnered by China's CNPC (30%) and Iran's Petropars (19.9%), in a deal signed last July—but all of that is expected to change.

Initial reports on whether (or to what extent) CNPC would gain a controlling stake in the contract gave conflicting accounts, which observers say is due to the fact that an official announcement detailing Total’s exit is still forthcoming.

However, on 13 August 2018, Total released a statement that said, “The contractual process is still ongoing and for our part, we have not been informed of an official CNPC position, but as we have always indicated, CNPC, a Chinese state-owned company, has the right to take over our participation if CNPC decides it.”

The first phase of the new US sanctions went into effect August 6, with the full implementation set for November 4. More moves impacting Iranian oil and gas markets are expected.