Major French oil company Total has now officially cut off its ties with Iran on its giant energy project in light of the looming threats brought by US economic sanctions on Tehran.
According to Reuters, Iran's oil minister announced on Monday that Total has already pulled out of deal following the on-going pressure from Washington on its allies as it tries to further strangle the Islamic Republic's struggling economy.
In a statement made through an Iranian state TV channel, Iranian official Bijan Zanganeh, confirmed Total's decision to back down on its original contract with the Islamic nation for the development project on phase 11 of the South Pars gas field.
As further stated on the ministry's official website SHANA which was in turn cited by the news agency, Zanganeh said that the French oil firm had actually made public of its plans to ditch the joint project with Iran more than two months ago.
Financial Times added that Total's slack will be taken over by China's state-owned oil company, China National Petroleum Corporation (CNPC). Zanganeh said that the transition with the other player "is underway."
Financial analysts, however, are quite positive on China making the move given the Asian country's growing oil demands. Should this scenario come to view, CNPC's share on the venture, which was initially at 30 percent, will balloon to 80 percent by the time it sets foot on the South Pars gas project.
Meanwhile, France 24 International Affairs editor Armen Georgian pointed out in an interview that Total's decision to retract from the deal won't necessarily affect the oil company's production, in fact it will continue on its plan to step up from its original rate.
"...they're [Total] still on track to increase production by 5 percent per year," the political expert said.
When talking of "prestige," however, Georgian pointed out that it would be a total "blow" to the company.
As found out, Total was the first foreign oil company to put stake on this South Pars project which also happens to be one of the biggest oil ventures in the world. So far, the French firm has already poured less than 40 million Euros on the investment.
South Pars, in particular, holds a staggering 7.5 percent of the total world gas reserves and will comprise nearly 40 percent of Iran's wealth from this natural resource.
In essence, it is very important for Iran to keep the project stay afloat despite the current developments such as Total backing down.
