Total SP Talks at Standstill

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TotalTotal's negotiations with Tehran on a multibillion-dollar contract to develop a major Iranian gas field are at a standstill, the head of the French oil major said on Friday.

They (negotiations) have not been broken and they have not been resumed either. They are not in a very advanced state, chief executive Christophe de Margerie told journalists on the sidelines of an economic forum in southern France.

Last month, IRNA said Tehran signed a $4.7-billion contract with China National Petroleum Corporation (CNPC) to develop Phase 11 of South Pars, replacing TotalTotal, which it had accused of delays.

We are waiting for things to calm down after all the news that came out, incidentally, in the run-up to the elections. People have been played off politically against each other, de Margerie said, adding Iran remained a key country for TotalTotal.

TotalTotal has a memorandum of understanding (MoU) with Iran's oil company NIOC to develop Phase 11 but the project was overshadowed by haggling over contract terms.

NIOC has accused TotalTotal of delays and gave the Paris-based company an ultimatum six months ago to finalize work before Tehran moved forward with another partner.

The South Pars reservoir is shared by Iran and Qatar. The Iranian part is divided into 24 phases.

TotalTotal's second-quarter earnings will be lower than a year earlier due to the drop in oil prices.

Definitely, with a price which was at the time (second-quarter 2009) half of what it was last year, we will not get the same results, de Margerie said.

TotalTotal posted second-quarter 2008 net profit of 4.73 billion euros, up 39 percent on the year.

We have the capabilities financially and with our portfolio to continue to grow, we are expecting a better environment, he said.

He played down the impact of the second quarter on the company's health.

That's not a big change for the company. You just have to be concerned about the fact that this crisis exists and it exists also for big companies, he said.

According to de Margerie, however, discussions with Iran's authorities continue regarding the development of the South Pars natural gas field.

They haven't been interrupted nor did they start again; they are near a not-so-advanced stage. I intend to maintain working relationships with Iran, despite the current local political situation, he said.

All we are looking for is that things calm down. Liquefied natural gas matters are very complex and Chinese energy companies don't have the same expertise as TotalTotal when it comes to LNG.

© Iran Daily 2009