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The South Pars natural-gas field in the Persian Gulf, the rights to which Iran shares with Qatar, is the largest of its kind in the world. Total SA had been developing the project before sanctions hit in 2009.

Caren Firouz/REUTERS

Iran plans Monday to sign a formal contract with Total SA and China National Petroleum Corp. to develop its share of the world's biggest natural-gas field – the first investment in the country by an international energy company since sanctions were eased last year.

Total and CNPC signed a "heads of agreement" with National Iranian Oil Co. in November to develop Phase 11 of the South Pars offshore gas field, a deal that was valued then at $4.8-billion (U.S.). Total chief executive officer Patrick Pouyanne will be in Tehran for the signing of the formal agreement, Parastoo Younchi, the Iranian oil ministry official in charge of foreign media relations, said Sunday.

A Total official confirmed that a 20-year contract with very attractive terms will be signed Monday. CNPC officials in Beijing didn't immediately reply to a request for comment e-mailed outside of normal Chinese business hours. Under the preliminary November accord, Total will control 50.1 per cent of the project, while CNPC will have a 30-per-cent interest and Iran's Petropars, 19.9 per cent.

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Also shared with Qatar, South Pars is Iran's section of the world's biggest gas deposit. The Persian Gulf field lies at the centre of a dispute embroiling Qatar and several Arab neighbours that was initiated when Saudi Arabia severed commercial links with Qatar last month, accusing it of cozying up to Iran, a Saudi rival. The planned signing of the South Pars contract will coincide with a deadline for Qatar to comply with 13 demands from the Saudi-led coalition, including a cutback in relations with Iran. Qatar has rejected the ultimatum.

Iran holds the world's biggest gas reserves, estimated by BP PLC at 1,183 trillion cubic feet (33 trillion cubic meters), and is the third-biggest oil producer in the Organization of the Petroleum Exporting Countries. The producer is wooing companies such as Total, Royal Dutch Shell PLC and Russia's Lukoil PJSC to invest in its oil and gas fields to boost output. Its oil production climbed 33 per cent last year after sanctions related to its nuclear program were eased in January, 2016, according to data compiled by Bloomberg.

Total, in November, put the cost of the first part of the South Pars project at $2-billion, with Total's share at $1-billion. The Paris-based company was working on South Pars until sanctions forced it to withdraw in 2009. The Total spokesman said Sunday the project is in strict compliance with French and international law, and the produced gas will supply the Iranian domestic market starting in 2021.

CNPC has been present in Iran since 2004, operating in oil, gas and oil-field services, according to the company's website. In 2006, it was awarded a three-year contract to provide offshore well-logging and other services at South Pars.

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