Iran signs major gas deal with France's Total

Iran signed a deal with France's Total on Tuesday to develop a major offshore gas field, its first big contract with a Western energy firm since sanctions were loosened in January.

Total will lead a consortium also including China National Petroleum Corporation (CNPC) and Iran's Petropars to develop Phase 11 of the South Pars field under a 20-year contract worth $4.8 billion (4.3 billion euros).

The project will eventually supply 50.94 million cubic metres (1.8 billion cubic feet) of gas per day into Iran's national grid, and marks a breakthrough in the oil ministry's efforts to attract Western investment and know-how to improve its outdated energy infrastructure.

The companies involved signed a memorandum of understanding in Tehran on Tuesday, and the final agreement will be signed early next year, Total's head of Middle East exploration and production, Stephane Michel, said.

It is the first deal of its kind since most international sanctions on Iran were lifted in January under a nuclear deal with world powers.

It also represents Total's return to Iran, which has the second-largest gas reserves and fourth-largest oil reserves in the world.

Total helped develop phases two and three of South Pars, but left four years ago when France joined European Union partners in imposing sanctions, including an oil embargo.

"Total is delighted to have been selected by NIOC (National Iranian Oil Company) – it is a recognition of both our technical expertise and the partnership the Group has built with Iran over the years," Total chairman Patrick Pouyanne said in a statement.

Iran's Oil Minister Bijan Zanganeh thanked Total and CNPC for working with Iran despite "difficult conditions".

"I hope the international companies that are still hesitating to come to Iran will be encouraged to take the leap," he said.