French energy giant Total is to sign a contract worth close to $5 billion with the Iranian government for development of an offshore gas field in co-ordination with China National Petroleum Corporation, said a report.

Total and CNPC had signed a “heads of agreement” with National Iranian Oil Company in November last year to develop Phase 11 of the South Pars offshore gas field, a deal that was valued then at $4.8 billion, reported Bloomberg.

Total had then put the cost of the first part of the project at $2 billion, with its share being $1 billion. The Paris-based company was working on South Pars until sanctions forced it to withdraw in 2009.

A 20-year contract with very attractive terms will be signed by Total chief executive Patrick Pouyanne in Tehran today (July 3), stated the report citing Parastoo Younchi, the Iranian oil ministry official in charge of foreign media relations.

As per the deal, the French oil major will 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.

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.

South Pars is Iran’s section of the world’s biggest gas deposit, shared also with Qatar, and the Persian Gulf field lies at the center of a dispute embroiling Qatar and several Arab neighbours.

Saudi Arabia severed commercial links with Qatar last month, accusing it of cozying up to Iran. 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, said the Bloomberg report.

Iran holds the world’s biggest gas reserves, estimated by BP at 33 trillion cu m, and is the third-biggest oil producer in the Organization of 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.