China National Petroleum Corporation’s role as a possible lead operator in a $4.8 billion Iran gas project is “uncertain” following the exit of co-investor French oil major Total due to US sanctions against Tehran.
“The South Pars phase 11 contract has a clause giving CNPC the option to replace the French major as the operator in the case sanctions are re-imposed, but this clause is not constraining,” said Homayoun Falakshahi, Middle East upstream analyst with Wood Mackenzie.
“While we understand the phase 11 contract offers relatively good terms, potentially generating an internal rate of return above 17 per cent, it is not certain if CNPC is willing to assume the project’s operatorship."
CNPC couldn't be reached for comment.
Chinese firms’ previous involvement in Iran, which has the second-largest gas reserves after Russia and 9.3 per cent of the world's proven oil reserves, has been fractious. CNPC's license to develop the large South Azadegan field near the Iraqi border was revoked in 2014 due to delays. The project to develop phase 11 of South Pars, which counts CNPC, Total and the local Petropars as partners, was considered a big win for the Iranian gas sector, which has languished from lack of investment and technology.
Total, which has significant gas expertise, was expected to bring its technical capabilities to develop the project alongside its partners, who now may not be able to develop the scheme on their own.
"Total’s exit is a big blow for Iran. The main challenge posed to Iran is that it had bet high on Total’s technology not only for phase 11, but for the future of the whole South Pars field,” said Mr Falakshahi.
The development of phase 11 was divided into two stages, the first involved a simpler process for pumping gas but the second phase requires more complicated technology.
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Read more:
Total confirms exit from $4.8bn gas project in Iran before US deadline
Total says CNPC has right to replace its lead on Iran project
Exclusive: Total to apply for waiver if US withdraws from Iran deal
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The Chinese firm may likely backtrack on potential involvement if it considers the second stage to be “too risky”, leaving Iran with the option of involving Petropars to execute stage one and new partners to tackle the last phase. Another option would be for state-owned National Iranian Oil Company to involve a consortium of local companies to develop the project. However, access to finance would be a challenge. Iran could also possibly cancel the project if it is unable to find financiers and expertise to develop a scheme it considers crucial to revive its gas industry.
Iman Nasseri, managing director for the Middle East at Facts Global Energy, is also doubtful of CNPC’s continued commitment to the project, noting the company had “strong incentive” to leave.
“The US-China trade war has created a lot of uncertainty over China’s situation with regards to Iran and the US sanctions on Iran’s oil industry,” he said.
Total, which has spent around $55 million in administration costs, front end engineering and design as well as launching tenders on the project, would be unable to recover its money following its exit, said Mr Falakshahi. Its payments would have had to come from revenues generated from the scheme, he added.
However, in the event of a CNPC takeover, the two companies may come to terms to agree to a partial or total recovery of costs. Should CNPC also exit the project, Total will not be able to make any recovery on its investment so far.
Tenders issued on the project will continue as usual but subject to review by the joint venture company, said Mr Nasseri. Mr Falakshahi noted that CNPC may lobby to get its affiliates involved in contracting work.
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Results:
Men's wheelchair 800m T34: 1. Walid Ktila (TUN) 1.44.79; 2. Mohammed Al Hammadi (UAE) 1.45.88; 3. Isaac Towers (GBR) 1.46.46.
The biog
Name: Greg Heinricks
From: Alberta, western Canada
Record fish: 56kg sailfish
Member of: International Game Fish Association
Company: Arabian Divers and Sportfishing Charters
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Eco%20Way%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20December%202023%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Ivan%20Kroshnyi%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Electric%20vehicles%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Bootstrapped%20with%20undisclosed%20funding.%20Looking%20to%20raise%20funds%20from%20outside%3Cbr%3E%3C%2Fp%3E%0A
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
EVIL%20DEAD%20RISE
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Normcore explained
Something of a fashion anomaly, normcore is essentially a celebration of the unremarkable. The term was first popularised by an article in New York magazine in 2014 and has been dubbed “ugly”, “bland’ and "anti-style" by fashion writers. It’s hallmarks are comfort, a lack of pretentiousness and neutrality – it is a trend for those who would rather not stand out from the crowd. For the most part, the style is unisex, favouring loose silhouettes, thrift-shop threads, baseball caps and boyish trainers. It is important to note that normcore is not synonymous with cheapness or low quality; there are high-fashion brands, including Parisian label Vetements, that specialise in this style. Embraced by fashion-forward street-style stars around the globe, it’s uptake in the UAE has been relatively slow.
Which honey takes your fancy?
Al Ghaf Honey
The Al Ghaf tree is a local desert tree which bears the harsh summers with drought and high temperatures. From the rich flowers, bees that pollinate this tree can produce delicious red colour honey in June and July each year
Sidr Honey
The Sidr tree is an evergreen tree with long and strong forked branches. The blossom from this tree is called Yabyab, which provides rich food for bees to produce honey in October and November. This honey is the most expensive, but tastiest
Samar Honey
The Samar tree trunk, leaves and blossom contains Barm which is the secret of healing. You can enjoy the best types of honey from this tree every year in May and June. It is an historical witness to the life of the Emirati nation which represents the harsh desert and mountain environments
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Company%20profile
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Warlight,
Michael Ondaatje, Knopf
Prop idols
Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.
Sophie Shams (Dubai Exiles mini, England sevens international)
An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.
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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)
Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.
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Erin King (Dubai Hurricanes mini, Ireland sevens international)
Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.
Company%20profile
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COMPANY%20PROFILE
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
