French energy giant Total to pull out of Iranian gas project

Total seeks exemption from US sanctions for Iran gas project

The French company's deal with Iran was the first major Western energy investment in the Islamic Republic since sanctions related to Iran's nuclear power program were lifted.

Paris: Total, the French energy company, will pull out of a multibillion-dollar gas project in Iran if it can not secure a waiver from USA sanctions, the company said on Wednesday.

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 first major European company to resume business in Iran after sanctions were lifted in 2016 in exchange for curbs on Iran's nuclear activities.

NIOC has in the past stated that it would not compensate Total for any investment it has made in the project thus far.

Iran did not immediately comment on Total's announcement.

SP11 is the biggest proposed project between an worldwide oil company and Iran and if Total withdraws, it will likely deal a significant blow to Tehran. It most recently imposed such stiff penalties on China's ZTE technology giant that the firm has said it will be forced to go out of business unless it gets a reprieve.

A European diplomat was more blunt: "We have a situation where there is a will to impose sanctions on Europeans and a resentment towards European companies who are now being accused of supporting a terrorist state".

"The risks of being on the wrong side of the US government are not worth the benefits of trading with Iran, once the sanctions are in place", said Jason Gammel, an analyst at Jefferies LLC.

Total also confirmed it is lobbying authorities in both Paris and Washington for a waiver to the United States sanctions which are due to come into effect November 5.




A gas flare on an Iranian oil production platform.

Another Danish oil tanker operator Torm has said it would stop taking new orders in Iran.

Earlier, EU foreign policy Chief Federica Mogherini said that the foreign ministers of Iran, Britain, France and Germany had agreed to task experts with protecting European business in Iran and that further talks on the matter are expected.

But big European companies simply aren't willing to take the risk of continuing to invest and operate in Iran.

The oil company said USA institutions were involved in 90pc of its financing operations, and make up 30pc of its shareholder base.

Iran has said it may start enriching uranium again if it can no longer see any economic benefit to the deal.

Total's position shows how hard it will be for European powers to safeguard their interests inIran and offer guarantees to save the nuclear deal.

But Mogherini said the European Union would make every effort to maintain business ties with Tehran and ensure that Tehran can continue to sell its oil around the world.

The EU's top energy official, Commissioner Miguel Arias Canete, is meanwhile heading to Iran on May 18-21 for talks on energy cooperation, a symbolic gesture from the EU that it wants to stay engaged despite the U.S. withdrawal.

In announcing his withdrawal from the deal, Trump warned companies that they face sanctions if they do business with Iran.

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