A preliminary deal between Iran and France's Total SA to develop an offshore Persian Gulf gas field represents the first investment by a Western energy company since international sanctions were relaxed earlier this year.
The $6 billion deal between Total and Iran's state-owned Petropars includes the participation of China National Petroleum Corp. in a consortium to develop what's known as the South Pars field estimated to contain 14,000 billion cubic meters of gas, or about 8 percent of the known global reserves.
The Wall Street Journal reports that the deal is still in draft stage with the final agreement expected in the next six months. It adds:
"The agreement with the French oil giant could be a harbinger for the return of more Western companies to Iran's vast energy industry and represents a step forward for the Islamic Republic's goals of ramping up production of oil and gas over the next several years."
Total is no stranger to Iran or its vast gas and oil reserves. The French company has had its eye on the South Pars field, which Iran shares with Qatar, dating back to 2004. It and China's CNPC had signed development deals with Iran to begin work there before international sanctions forced them to pull out in 2009.
The deal calls for Total to control 50.1 percent of the consortium. CNPC will take 30 percent and Iran's Petropars has 19.9 percent.
Iran has one of the world's largest natural gas reserves, but it needs foreign expertise to develop and export it. American companies are still prohibited under U.S. law from investing there.