China’s state-owned energy major CNPC is ready to take over Total’s stake in the giant Iranian South Pars gas project if the French company leaves amid newly announced U.S. sanctions, industry sources said, Reuters reports.
The United States this week said it would impose new sanctions against major oil and gas producer Iran after abandoning an agreement reached in late 2015 that limited Tehran’s nuclear ambitions in exchange for sanctions relief.
While the new sanctions are unilateral, many companies, including Japan’s Inpex, already appear to be bowing to Washington’s pressure and abandoning projects in Iran.
If Total walks away from the South Pars field, which has the world’s biggest natural gas reserves ever found in one place, CNPC is prepared to step in, the sources said.
It was not clear whether CNPC had received top government approval to do so. But such a move could further strain the tense trade relationship between Beijing and Washington.
Reuters reported in December that a $1 billion deal signed last July gave the Chinese firm the option to take over Total’s stake if it left Iran.
Since then, the Beijing-backed giant has conducted significant due diligence and planning, several high-level industry sources told Reuters.
“The possibility of Total’s pullout is quite high now, and in that scenario CNPC will be ready to take it over fully,” said a senior state oil official with knowledge of the contract.
An executive with direct knowledge of the project added that planning began “the day the investment was approved.”
“CNPC foresaw a high probability of a reimposition of (U.S.) sanctions,” the executive said.
