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Iran Oil Minister Underlines Financial Clarity in Gas Deal With Total

The $4.8 billion contract has come under the spotlight and scrutiny of media and authorities in recent weeks
Iran Oil Minister Underlines Financial Clarity in Gas Deal With TotalIran Oil Minister Underlines Financial Clarity in Gas Deal With Total

Iran's oil minister said there will be no ambiguities in payments and financial transactions pertaining to the gas deal with French energy company Total.

Total sealed a milestone deal this month to develop Phase 11 of the giant South Pars Gas Field in the Persian Gulf, making it the first major western corporation to return to Iran's energy market after last year's sanctions removal. 

The French supermajor will lead a consortium that includes China's CNPC and Petropars, Iran's largest state-run exploration and production enterprise.

But the $4.8 billion contract has come under the spotlight and scrutiny of media and authorities in recent weeks, as opponents of the deal have raised questions about Total's murky financial records in Iran.

"We face no problem in executing the South Pars contract as their [Total's] payments will not be made within Iran's financial system," Zanganeh was quoted as saying by Shana on Saturday. He did not elaborate.

"Total and other members of the consortium will make payments to subcontractors without any difficulty," the minister added, without saying if an offshore institution will handle the financial affairs of the mega gas project.

The remarks come amid allegations that Total had paid bribes in the 1990s and early 2000s to secure oil and gas contracts in Iran. In 2013, Total agreed to pay $398 million to settle US criminal and civil allegations that it had paid around $60 million in bribes between 1995 and 2004 to get contracts for two major Iranian oil and gas projects. 

Domestic critics of the South Pars deal assert the court settlement is proof that Total had indeed bought its way into Iran's lucrative project and cannot be a reliable international partner.

Gas Deal Justified

In a parliamentary session this month, Zanganeh justified the partnership with the world's fourth largest oil and gas firm. 

According to the minister, Total will be remunerated only after production begins at Phase 11.

"It is very unlikely that they abandon the project before completion. Based on the terms of the contract, Total's revenue is contingent upon gas production from Phase 11. Therefore, as long as the project is not fully implemented, they will earn no money," he was cited as saying by IRNA on July 14.

The minister has said that implementing Total's know-how in the gas project will allow Iran to keep pumping gas at peak levels for a longer period and offset a natural decline in production from the joint gas reservoir.

"Total will employ new technology that is unrivaled in the region. Plans are in place to construct and install a 20,000-ton platform in South Pars … No country in the region has ever carried out an operation of this proportion," Zanganeh said.

Iran hopes the contract with Total will encourage other big names to bring their investment and technology to a country that holds the world's fourth largest crude oil reserves and second largest gas reserves.

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