News : Economy
- Published: Friday, 28 July 2017
By INU Staff
INU - Total, France’s huge multinational oil and gas company, has made a controversial $4.8-billion-dollar deal with Iran. Along with a state Chinese firm and an Iranian subsidiary, Total will be developing phase 11 of the largest gas field in the world, Iran's mammoth South Pars gas field. It’s expected that the project will render 2 billion cubic feet of gas per day, equivalent to 400,000 barrels of oil.
The first stage is estimated to cost $2 billion, with an end price of up to $5 billion, with production projected to start within 40 months. Iran's domestic market will receive the supply in 2021.
However, Washington continues to impose sanctions on Tehran, and their comprehensive Iran policy has not yet been defined.
Numerous concessions have been provided to Total by Iran, so the risk may be worth taking. As well, Iran may receive no compensation if Total decides to abandon the contract. This happened ten years ago, when a similar contract was signed between Iran and Total, which ended with the French company pulling out and not paying any compensation. As the contract remains classified, this scenario is only a possibility.
Khamenei has remained silent despite all the disagreements and discussions inside the regime. Iran's parliament canceled any and all discussions, and as in all major policy matters, Khamenei has the final word.
The Revolutionary Guards (IRGC) are concerned, as the Total deal leaves it out of earning any direct revenue.
The $4.8 billion deal only provides for 2.5 percent of Tehran's investment needs, because in the next five years, according to the Oil Ministry, Iran will need around $200 billion in investments. This deal provides only 1/40th of that amount. In fact, according to the Iranian Parliamentary Research Center, Iran will go from being an oil exporter to becoming an oil importer if around $150 to $200 billion in foreign investments are not realized in the next decade.
Total, a foreign company, owns 50.1 percent of contract share, China owns 30 percent and Iran owns only 19.9 percent. This huge gas resource, that belongs to the Iranian people, will be handled by a foreign company. This contract is considered illegal, according to the Guardian Council, a body tasked to oversee the parliament's actions. This is based on Article 81 of Iran's constitution, which states that no contract should place over 50 percent of shares to a foreign company, especially a long-term and classified company set for 25 years. Additionally, based on Article 77 of the Iranian Constitution, the parliament must be informed of all foreign contracts.
Total is not even obliged to transfer any technology to Iran until the gas field begins to lose its output. Only then is Total obligated to provide Iran its technology.
Iran claims that this deal signals that the sanctions wall is crumbling, yet the US Congress is back to work, and Iran sanctions bill are high on its agenda.
According to the Financial Times, Washington's efforts to keep Iran at a distance from the international banking system have has much the same effect as would tearing up the nuclear deal. Warnings by The Financial Action Task Force, an intergovernmental body established to fight global money laundering, have been issued about the consequences of any deals made with Iran.
The FATF listed nine countries, including Iran, who have failed to take action against financial measures that provide money to terrorists, as well as money laundering.
The Iran list of sanctioned individuals and entities involved in nuclear and ballistic missile activities has been renewed by the European Union. Individuals with renewed information on the EU list include 23 names:
• IRGC Quds Force chief Qassem Suleimani.
• Former IRGC chief Rahim Safavi.
• Former IRGC Basij chief Mohammad Reza Naqdi.
• Deputy Interior Minister for Security Affairs of Iran Mohammad Baqer Zolqadr.
• Former Iranian Atomic Energy Organization Fereydoon Abbasi.
• Mohsen Fakhrizadeh, also involved in Iran's controversial nuclear program
Also included on this are 14 nuclear and ballistic missile groups and centers.
While the U.S. administration continues to analyze its Iran policy, and regime change is a major possibility as stated by White House officials, Iran is not a politically stable country.
In a recent interview, U.S. Secretary of Defense James Mattis said that establishing friendly relations with Iran hinges on regime change. In a Congressional hearing last month, U.S. Secretary of State Rex Tillerson also spoke of peaceful regime change.
The Iranian opposition, the National Council of Resistance of Iran (NCRI), held its famous annual convention in Paris in early July. Hundreds of dignitaries and many thousands of Iranian expats gathered together, from across the globe.
Former New York Mayor Rudy Giuliani and former House Speaker Newt Gingrich, considered Trump emissaries, discussed the necessity for regime change in Iran.
A viable alternative to the regime in Tehran, the NCRI, proves that regime change is achievable.
Total should reconsider the risk of doing business with Iran.
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