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Total says Iran project progressing per plan

06 Mar 2018 04:10 GMT
Total says Iran project progressing per plan

Houston, 6 March (Argus) — Total says its South Pars natural gas project in Iran is progressing on schedule as part of the company's broader plan to focus on five core areas of operation.

The comments from chief executive Patrick Pouyanne on the $4.8bn project to develop phase 11 of the South Pars project follows US President Donald Trump's threats to re-impose sanctions on Iran's crude exports in May, unless European powers persuade Tehran to meet Washington's demands on revisiting the Joint Comprehensive Plan of Action (JCPOA).

"Even if we lose $1bn in Iran, it is not going to sink the company," Pouyanne said this week at the CERAWeek conference in Houston.

Total's five core areas of operations to drive growth include the Middle East, Africa, the North Sea, deepwater projects and liquefied natural gas (LNG). He remains unfazed by the European major's lack of presence in the booming US shale basin, the Permian, spread across Texas and New Mexico, an area which is expected to drive output growth for peers including ExxonMobil and Chevron.

"I don't think it is the best allocation of capital," Pouyanne said, referring to the Permian. "Never say never but it is not a priority. I prefer to play into my strengths."

Giving an example of playing into the company's strengths, Pouyanne spoke of his recent acquisition a 16.33pc non-operated stake in the Waha concessions in Libya for $450mn by taking over US independent Marathon Oil's subsidiary in the country.

The deal is "taking advantage" of the current situation in the country, giving Total's access to reserves and resources in excess of 500mn bl of oil equivalent (boe), which at that price translated to less than $1/boe, he said.

The decision to acquire Danish firm Moller-Maersk's upstream subsidiary Maersk Oil, was also part of the same strategy, he said. The deal is expected to close on 8 March, he said.

While it does not have a presence in the Permian, Total assumed sole control of its Barnett shale gas joint venture in north Texas by acquiring partner Chesapeake Energy's 75pc stake, following the US independent's decision to exit. The field will play a key role in the company's plan to grow its global gas business.

As the gas business grows, particularly following its acquisition of a significant portion of the global LNG market with the purchase of French firm Engie's LNG business, Pouyanne said Total may change from being an oil and gas company to a gas and oil company.