Total seeks exemption from US sanctions for Iran gas project

Total said it could not afford to breach the looming U.S. sanctions against Iran due to its reliance on American banks and shareholders.

Total signed a contract in 2017 to develop phase 11 of Iran's South Pars field with an initial investment of $1 billion, marking the first major Western energy investment in the country after sanctions were lifted in 2016.

As a outcome, "Complete is not going to be able to proceed the SP11 challenge and should unwind all related operations earlier than four November 2018 except Complete is granted a selected challenge waiver by the U.S. authorities with the assist of the French and European authorities", the French firm mentioned in a press release.

CNPC has a 30% stake in the venture, with Petropars at 19.9%, leaving Total with an operatorship of 50.1%.

Oil companies have been forced to reassess their investment plans in the OPEC producer, however, in the wake of the May 8 move by the United States to pull out of the worldwide nuclear deal with Iran and re-impose sanctions on the country.

The nuclear agreement, worked out by the U.S. under former President Barack Obama, together with five other world powers and Iran, lifted sanctions on Iran in exchange for limits on its nuclear programme.

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

Italy's Eni, which last June signed a provisional agreement with Tehran to conduct oil and gas feasibility studies, said after Washington's decision to quit the nuclear deal last week that it had no plans for new projects in Iran.

Companies caught violating sanctions could be cut off from the USA financial system and targeted with a range of other punishments.

For the French firm to remain, a challenge waiver must shield the corporate from "any secondary sanction as per USA laws", it mentioned.

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. It also has significant operations and a large number of shareholders in the United States.

Total's announcement comes after German insurer Allianz and Danish oil product tanker operator Maersk Tankers said they were winding down their businesses in Iran.

Total's prospects of securing a waiver that would allow it to continue with the South Pars deal look slim. The gas was supposed to start flowing into the Iranian market in 2021.

(Copyright © 2015. All Rights Reserved.)
 
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