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 CNPC's license to develop the large South Azadegan field near the Iraqi border was revoked in 2014 due to delays.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.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
RESULT
Bayer Leverkusen 2 Bayern Munich 4
Leverkusen: Alario (9'), Wirtz (89')
Bayern: Coman (27'), Goretzka (42'), Gnabry (45'), Lewandowski (66')
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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
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
The bio
Favourite book: Peter Rabbit. I used to read it to my three children and still read it myself. If I am feeling down it brings back good memories.
Best thing about your job: Getting to help people. My mum always told me never to pass up an opportunity to do a good deed.
Best part of life in the UAE: The weather. The constant sunshine is amazing and there is always something to do, you have so many options when it comes to how to spend your day.
Favourite holiday destination: Malaysia. I went there for my honeymoon and ended up volunteering to teach local children for a few hours each day. It is such a special place and I plan to retire there one day.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Five expert hiking tips
Always check the weather forecast before setting off
Make sure you have plenty of water
Set off early to avoid sudden weather changes in the afternoon
Wear appropriate clothing and footwear
Take your litter home with you
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Should late investors consider cryptocurrencies?
Wealth managers recommend late investors to have a balanced portfolio that typically includes traditional assets such as cash, government and corporate bonds, equities, commodities and commercial property.
They do not usually recommend investing in Bitcoin or other cryptocurrencies due to the risk and volatility associated with them.
“It has produced eye-watering returns for some, whereas others have lost substantially as this has all depended purely on timing and when the buy-in was. If someone still has about 20 to 25 years until retirement, there isn’t any need to take such risks,” Rupert Connor of Abacus Financial Consultant says.
He adds that if a person is interested in owning a business or growing a property portfolio to increase their retirement income, this can be encouraged provided they keep in mind the overall risk profile of these assets.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
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Price: From Dh439,000
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
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Arsenal's pre-season fixtures
Thursday Beat Sydney 2-0 in Sydney
Saturday v Western Sydney Wanderers in Sydney
Wednesday v Bayern Munich in Shanghai
July 22 v Chelsea in Beijing
July 29 v Benfica in London
July 30 v Sevilla in London
