France's Total to quit Iran gas project if no sanctions waiver

What Happened: French oil and energy company Total announced that it may withdraw from the Iran South Pars 11 (SP11) energy project, following U.S. President Donald Trump's decision to pull out of the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action, Reuters reported May 16.

The group said it has $10 billion of capital employed in its United States assets, and USA banks are involved in 90 percent of its financing operations, making Total highly vulnerable if targeted by any U.S. actions. Zanganeh noted that the country will definitely overcome the difficulties that result from the USA withdrawal from the nuclear deal.

Danish oil product shipping operator Maersk Tankers said it would wind down its customer agreements in Iran by November, while German insurer Allianz said on Tuesday it was preparing to wind down Iran-related business.

Total has been carrying out tenders for topsides, jackets, pipelines and other work since soon after receiving its $2 billion contract for the gas field in July 2017, but it has yet to make a final investment decision.

Total faces losses of several tens of millions of dollars if it pulls out of the project.

EU leaders at a summit in the Bulgarian capital of Sofia late on May 16 reaffirmed their commitment to trying to keep the landmark 2015 agreement alive and protecting European companies doing business in Iran.

"In these circumstances, Total will not take any further commitment related to the SP11 project and, is engaging with the French and USA authorities to examine the possibility of a project waiver", the group said.

The EU's top energy official, Commissioner Miguel Arias Canete, is heading to Iran for talks from May 18 to 21 to discuss ways of trying to overcome renewed USA sanctions against Iran's oil industry.

Total said it would not be making any further commitments towards the Iranian South Pars project for now, and added it was engaged with French and United States authorities over the possibility of a waiver to the project. "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said.

European Commission head Jean-Claude Juncker was due to present options to protect European investment, which could include retaliatory sanctions, allowing the European Investment Bank to invest in Iran, and coordinating euro-denominated credit lines from European governments. Joe Kaesar, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran. "With that in mind it's a logical decision".

Pulling out of the South Pars project could result in Total losing its stake to China National Petroleum Corp., National Iranian Oil Co.

  • Eleanor Harrison