TEHRAN: 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 (4.3bn euros).

The project will eventually supply 50.9 million cubic metres (1.8bn 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grid, and marks a breakthrough in the oil ministry’s efforts to attract Western investment and know-how to improve its outdated energy infrastructure.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.

Iran’s vice-minister for oil, Amir Hossein Zamani Nia, said another major deal with a European company would be signed “in two to three weeks”.

Tuesday’s signing 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 effectively left Iran four years ago when France joined European Union partners in imposing sanctions, including an oil embargo.

“We’re the first Western major to return to Iran. We’re very happy,” Total chairman Patrick Pouyanne told AFP.

“It’s important because it’s always when we innovate and when we are first that we score points,” he added.

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.

Published in Dawn November 9th, 2016