Corporate News Blog - Total S.A. Inks a $1 Billion Investment Deal with Iran's NIOC
LONDON, UK / ACCESSWIRE / July 5, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Paris, France based Total S.A. (NYSE: TOT), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=TOT. The French oil and gas Company announced on July 03, 2017, that it has signed a contract with the National Iranian Oil Company (NIOC) for the development and production of the phase-11 of the South Pars gas field in southern Iran. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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The South Pars is the world's largest gas field and the phase-11 project has an estimated production capacity of 2 billion cubic feet per day or 400,000 barrels of oil equivalent per day including condensate. The gas produced from this project will be supplied to Iran's domestic market. The supply is expected to start in 2021.
Iran has been trying to move out of the shadow of the nuclear sanctions imposed by the US. The development agreement for the South Pars gas field with France's Total will be its first major investment from a Western nation since the sanctions were lifted.
Iran signed the deal with Total and the signing was witnessed by Iranian Oil Minister, Bijan Zanganeh. The Oil Minister emphasized that Iran needed an investment of approximately $200 billion in its oil industry in the next five years. The current deal is expected to contribute to the country's revenues as well as finalize a long-term supply of gas for its domestic needs.
Commenting on the signing of the IPC, Patrick Pouyanné, Chairman and CEO of Total, said:
"We are proud and honored to be the first international Company to sign an IPC, which offers an attractive commercial framework, following the 2015 international nuclear accord (JCPOA) and to therefore contribute to the development of relations between Europe and Iran. Total will develop the project in strict compliance with applicable national and international laws. This project is in-line with the Group's strategy to expand its presence in the Middle East and grow its gas portfolio by adding low cost, long plateau assets."
Details of the contract
This is the first contract being signed as per the Iranian Petroleum Contract (IPC) and is for a 20-year term. According to the terms previously mentioned, the SP11 project will be developed in two phases. In the first phase, the Company plans to develop 30 wells and 2 wellhead platforms connected to existing onshore treatment facilities by 2 subsea pipelines. The approximate cost for this phase is around $2 billion. Given, Total's stake in the project, its contributions in the first phase would be $1 billion.
In the future, the second phase will see the construction of offshore compression facilities as required by the reservoir conditions. The construction of the offshore compression facilities will be the first on the South Pars gas field.
Total has already undertaken engineering studies on behalf of its project partners and started the tendering process to identify contractors for the development of the project. The project is expected to start by end of FY17.
Background
The current contract is the culmination of the Total's signing of the Heads of Agreement (HoA) in November 2016 to develop phase-11 South Pars gas field. The HoA was signed with NIOC with the aim of feeding the gas produced from this project to Iran's domestic gas network. To operate the SP11 project, Total had partnered with Petropars, a 100% subsidiary of NIOC, and the Chinese state-owned oil and gas Company CNPC. Total owned the majority stake in the project with 50.1% interest, CNPC the second major stake holder with 30% interest, and the remaining 19.9% interest is owned by Petropars.
As per the terms of HoA, the project partners would negotiate and finalize a 20-year contract detailing the technical and economic terms in accordance with the Iranian Petroleum Contract (IPC) as approved by the Iranian Parliament.
It is estimated that the entire project would be valued at approximately $4.9 billion.
Last Close Stock Review
Total's stock climbed 1.03%, closing Monday's trading session at $50.10 on volume of 746.87 thousand shares. The Company's shares gained 2.79% in the last twelve months. The Company's shares are trading at a PE ratio of 16.74 and have a dividend yield of 5.51%. At Friday's closing price, the stock's net capitalization stands at $126.17 billion.
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