China’s CNPC is considering taking over Total’s stake in a giant Iranian gas project if the French company leaves Iran to comply with any new US sanctions, industry sources said.
The contract gave CNPC the option to take over Total’s stake if it pulled out, according to sources involved in the talks.
Under the terms of the agreement to develop phase 11 of South Pars, the world’s largest gas field, CNPC could take over Total’s 50.1% stake and become operator of the project if Total is forced to withdraw from Iran, a senior Beijing-based source with knowledge of the joint-venture agreement said.
CNPC has a 30% stake, while the Iranian national oil company’s subsidiary PetroPars holds the remaining 19.9%.
CNPC officials have held internal talks in recent weeks to discuss the implications of taking control, according to three industry sources briefed on the talks.
Spokespeople for CNPC, Total and Iran’s National Oil Company (NIOC) declined to comment.
A senior official at Total said the company has “some mechanism that permits us to exit the deal softly if forced to by international sanctions.”
Any change would likely delay the project’s timetable as Total is already in discussion with service companies and is expected to award contracts early next year, the sources said.
A change in ownership structure would mean that CNPC would shoulder 80% of the cost of the project, estimated at $2bn for the first stage.
“In the case of a Total withdrawal, CNPC may need to bring in CNOOC because CNPC has little experience offshore,” a second senior Chinese industry official said.