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

The South Pars gas field facilities in the southern Iranian port town of Assaluyeh                  AFP  Atta Kenare

So the French energy giant won't commit any more funds to Iran's South Pars 11 project, in which it took a controlling stake a year ago.

Total issued a statement on Wednesday on the future of its oil projects in Iran stating that the decision came after President Donald Trump's announcement to withdraw from the JCPOA.

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 U.S. authorities over the possibility of a waiver to the project.

European Commissioner for Migration and Home Affairs Dimitris Avramopoulos, for his part, said that the EU is discussing "the possibility of applying our blocking statute" to protect the interests of European companies from the re-introduction of USA anti-Iranian sanctions.

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's announcement is in line with previous claims that it may be unable to conduct business in Iran should the United States bow out of the Iran nuclear deal and levy sanctions against Iran. The European Union, also a signatory to the atomic deal, has pledged to take steps to salvage the accord.

"Total will not be in a position to continue the SP11 project and will have to unwind all related operations before 4 November 2018 unless Total is granted a specific project waiver by the USA authorities with the support of the French and European authorities", the French group said in a statement.

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US banks are involved in more than 90% of Total's financing operations, American shareholders represent upward of 30% of its investors and the company has more than $10 billion of capital employed in the country, it said. Total does about 30 percent of its business through the USA banking system. "There will be niche players who will far more benefit from trading with Iran than risk from the USA system, but it's going to be a very small set of players that are not going to be particularly well capitalized".

Should France's Total pull out of the project on development of South Pars gas field's phase 11, China's CNPC will replace it, Zanganeh told reporters on Wednesday. Managing Director Ali Kardor said this month.

Zanganeh's statement came after the French energy giant said that is preparing to pull out of the gas project in the face of renewed USA sanctions.

Sunk costs for Total as relates to its 50.1 percent stake in the project amount to roughly 40 million euros, according to its press release, but previous reports are that Total has sunk about $90 million into South Pars.

Denmark's Maersk Tankers, a major global shipping company whose oil tankers help carry Iran's oil exports to Asian markets, has also announced that it will wind down its business with Iran by November.

The company didn't say if these trades will be affected.

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