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Sanctions Won't Last Forever |
The French Total company
once signed a contract with Iran despite international sanctions to develop
phases 2 and 3 of South Pars gas field. Bernard Sudreau is now running the
sole Western oil company that has not downsized its Tehran office. The
following interview with Sudreau contains interesting points.
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We are here for capital return from the said project. On the other hand,
sanctions won't last forever and we are looking forward to their
lifting.
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Mr. Bernard
Sudreau, you have heard that in the opening ceremony of the 16th
International Oil and Gas Exhibition in Tehran both the first vice president
and minister of petroleum invited foreign companies to invest in Iran's oil
projects. As the first question, I would like to know your opinion about that
invitation?
Total is a European company and has to comply with regulations passed by the
European Union. However, we are committed to all contracts we have signed with
Iran before July 2010 because the European sanctions went on effect in July
2010. Thenceforth we should observe the sanctions, but this does not mean that
we are not willing to operate on new projects in
Iran.
So, you have
not undertaken new projects in Iran after July 2010?
That's
true. We will do no more projects, but projects whose contracts were signed
prior to that date will continue.
I don't
think that Total has any contracts which have not ended before July 2010. What
contracts you are talking about?
Total
was willing to sign contracts with Iran before that date. If no contract was
signed it was due to dawdling on the part of the Iranian Ministry of
Petroleum. We were totally ready to sign contracts with Iran before that date.
Contract signing, however, needs mutual consent and can't be unilateral. If we
did not sign any contracts before July 2010, it was not due to the US
sanctions or other sanctions. Before that date we were not affected by
sanctions. No contract was signed because no agreement was reached to form the
basis for a contract.
Total is
currently operating on no projects in Iran. Is that so?
Yes. We
are operating on no new projects in
Iran.
Our last project was development of Doroud oil field, which was finished in
2008. We have not settled financial scores for the implementation of Sirri,
Belal, and Doroud projects as well as phases 2 and 3 of South Pars gas field.
I mean, we are in the phase of capital return from those projects.
Total was
facing problems in Doroud and oil production from that field was not totally
in line with the contract. How many barrels per day of oil the field was
producing when you commissioned the project?
As per
the contract, the field was commissioned in 2008. You should ask that question
from the client. Doroud was the first output rise project.
Why Total is
still keeping its office in Iran? You cannot operate on new projects and
previous projects have been all finished.
We are
here for capital return from the said project. On the other hand, sanctions
won't last forever and we are looking forward to their lifting. At present,
Total cannot sign contracts with Iran, but this does not prevent us from
negotiating future project with the Iranians and keeping in touch with them.
Mr. Sudreau,
don't you think that such sanctions will also harm oil majors? Iran possesses
one of the biggest oil reserves in the world and there is a lot of room for
work here. When big international oil companies like Total are away, they will
be easily replaced by Chinese ones. It seems that although sanctions have
caused difficulties for the Iranian oil industry, they have also kept oil
majors away from a premium market like Iran.
Total
specialized in oil and gas exploration and production. Therefore, it would be
very good for us to have more and more projects. Iran, on the other hand,
enjoys enormous oil and gas reserves. Unfortunately, we cannot operate on new
projects in your country. As you said, contracts that we lost were reassigned
to Chinese and other oriental companies. But what is lost is lost.
Total had
great stakes in Iran. Did the French government even ask about Total's opinion
about the European Union sanctions?
You
should understand that these are the European Union's sanctions and France,
even if opposed to the sanctions, has only one vote.
In one case,
at least, I remember that a Chinese company signed a major contract with Iran
and then introduced an international company as its partner. I mean Yadavaran
project which was given to the Chinese Sinopec which, in turn, chose the Shell
as partner. I want to know is there any possibility for you to work for the
Chinese behind the scenes without directly investing in Iran?
This has
been forbidden by sanctions. Shell also left Yadavaran after the sanctions
went into effect.
Suppose that
the sanctions were lifted today, what projects would Total be willing to have
a share of?
Any
project which is economically viable and on which both the client and the
contractor could reach an agreement.
Like what
projects?
We had
progressed well on Pars LNG project and a lot of engineering operations had
been done. If the sanctions were lifted tomorrow, that would be an important
project for us. Otherwise, we would accept other oil and gas projects.
As you know,
the Iranian Ministry of Petroleum has given up LNG projects in favor of gas
export via pipeline. Have you noticed that?
This
idea has been on the table since 10 years ago. Iran can work in both ways.
This alternative could have been viable before the earthquake in Japan, but
after the earthquake, problems in Japan may affect the balance of gas
delivery.
If sanctions were lifted, would Total be willing to invest in the Caspian Sea
projects?
If there
were remarkable projects, yes, we would be ready. Total is working with
Kazakhstan and Azerbaijan in the Caspian Sea. If worthwhile projects are
offered here, why not?
What about
development of Arash gas field which is shared with Kuwait. Are you willing to
invest on it?
At present, we
cannot take part in any new projects. We must wait and see when the sanctions
are lifted. |
