Following the withdrawal of French oil major Total from the South Pars phase 11 gas project in Iran, China National Petroleum Corp has a difficult decision to make on whether to step up as lead operator.

In July 2017, Total signed up as the lead partner alongside Petropars of Iran and CNPC, and, crucially, was responsible for bringing in new technology.

Phase one, with an estimated cost of around US$2 billion, was planned to comprise wells and wellhead platforms connected to existing onshore treatment facilities. The more complex  second phase includes the construction of offshore compression facilities.

Total recently notified the Ministry of Petroleum that it was withdrawing from the contract as a consequence of US sanctions put in place following the decision by President Donald Trump to pull out of the Iran nuclear deal (formally known as the Joint Comprehensive Plan of Action).

In spite of support from both the French government and the European Union, Total could not persuade the US government to give it a waiver with regard to sanctions against Iran.

CNPC has the option to replace Total as the project operator, but the future of the project remains uncertain. Reacting to speculation that CNPC will acquire the Total stake, the National Iranian Oil Company (NIOC) recently put out a statement that said no modifications to the contract have been made so far.

Total signed a deal with Iran in 2017, taking a 50.1% stake in the project. CNPC owns 30% and Petropars 19.9%. Total project cost was estimated at US$5 billion.

The prospect of multi-billion dollar foreign investment to modernise Iran's inefficient oil & gas infrastructure was one of its biggest incentives in signing up to the 2015 nuclear deal.

South Pars lies in the northern half of a vast gas field in the the Persian Gulf, and the southern part of the same gas field belongs Qatar, and is known as the North Dome field. South Pars is being developed in 24 phases.

Gas from Phase 11 was intended for the domestic market. However, Iran has long-term ambitions to use pipelines for exports- and for LNG facilities. At the moment there is only one relatively small LNG project, known as Iran LNG.