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Landmark Energy Deal With Total Getting A Seal Of Approval

A general view shows a unit of South Pars gas field in Asalouyeh Seaport, north of Persian Gulf.

Chairman of the Energy Commission of the Iranian parliament has announced that the gas and oil development deal signed in June with the French energy giant Total has been approved by the country’s supreme watchdog of oil resources.

Parliament’s news agency quotes Fereydoun Hasanvand as saying that parliament and the attorney general’s office have also reviewed the contract and approved it. An official announcement will be made soon, he added.

The deal with Total is mainly to develop the South Pars gas and oil fields in the Persian Gulf, bordering the huge offshore gas fields of Qatar.

It is the first big energy investment in Iran since the 2015 sanctions relief deal. The South Pars offshore field was first developed in the 90s and Total was one of the biggest investors in the project before sanctions were imposed in 2006 over Iran's nuclear program.

After the signing of the contract, Iranian conservatives unleashed a barrage of criticism, some even calling it treason. However, there were some reports that during the signing of the agreement, a representative of the supreme leader ayatollah Ali Khamenei was present.

The government of President Hassan Rouhani has hailed the agreement with Total as a big sign of economic success and a dividend of the nuclear deal reached with world powers in 2015.

The contract is the first major deal under a new scheme by the Rouhani government, called Iranian Petroleum Contracts, or IPCs. This model of contracts was developed with the specific aim of attracting foreign energy investments by reducing potential risks for investors.

Total's share in the deal will be 50.1 percent along with state-owned China National Petroleum Corporation, with 30 percent, and Iran's Petropars with a 19.9 percent stake.

After decades of lack of investments and infusion of new technologies, Iran’s energy sector desperately needs huge investments, possible only from major world energy companies.