Total to drop billion-dollar Iranian gas project unless United States waives sanctions

Total to drop billion-dollar Iranian gas project unless United States waives sanctions

Total (TOT -0.5%) says it may pull out of the South Pars 11 energy project in Iran following the us withdrawal from the nuclear agreement with Iran.

Total said it will unwind operations by November unless sanctions are waived.

The administration of President Donald Trump is phasing back in sanctions after his withdrawal last week from the Iran nuclear deal.

In a statement yesterday, it said: "Total will not continue the SP11 (South Pars 11) project and will have to unwind all related operations before November 4, 2018, unless Total is granted a specific project waiver by United States authorities with the support..."

However, officials with the company state that they will have to walk away from the project if they are not exempted from the new U.S. sanctions. But the reach of the US financial system, the dominance of the dollar and the presence of European companies' operations in the United States all weaken any potential EU counter-measures. "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said.

United States banks are involved in more than 90% of Total?s financing operations, Total said, adding that USA assets represent more than $10 billion of capital employed and that 30% of its shareholders are in the US.

Total said it was working with French authorities towards trying to secure a waiver for the South Pars project.

Since the July 2015 nuclear accord, Total, together with its project partners, has been carrying on tendering for subcontracts and other preparatory work to develop the eleventh phase of the South Pars development, which would supply the domestic market in Iran.

Total was the furthest advanced of its European oil major peers in a cautious feeling out of upstream opportunities in Iran since the easing of global sanctions at the start of 2016. Total owns 50 percent of the project with a Chinese company owning a 30 percent stake.

Phase 11 is due to produce 2 billion cubic feet per day of gas and 80,000 barrels per day of condensate, in addition to large amounts of sulphur and other products, starting in 2021.

French energy giant Total is preparing to pull out of a billion dollar gas project in Iran in the face of renewed USA sanctions. Calling it "decaying and rotten", he said the deal was "an embarrassment" to him "as a citizen".

"It would be suicide to do any new business or funding for Iran or Iran-related companies without explicit guarantees from the U.S. government".