TOTAL May Leave South Pars 11 if No Waiver

Europe to exempt its firms from US sanctions on Iran

Europe to exempt its firms from US sanctions on Iran

French oil major Total said Wednesday it's not in a position to continue its $5 billion South Pars Phase 11 project offshore Iran, as it can not afford to be exposed to any secondary sanction, Kallanish Energy reports.

French energy giant Total joined other major European companies in saying they will exit Iran unless US sanctions are waived, casting a shadow over efforts by European leaders to salvage the Iran nuclear deal.

"Total will not continue the SP11 (South Pars 11) project and will have to unwind all related operations before 4 November 2018, unless Total is granted a specific project waiver by US authorities with the support of the French and European authorities", the French oil and gas major said in a statement.

The US decision to withdraw from the nuclear deal between Iran and an alliance of western powers was taken earlier this month, despite opposition from France, Germany and the United Kingdom, and threatens a huge swathe of global business deals.

Total "will have to unwind all related operations before 4 November 2018", the company said, referring to a deadline set by the US Treasury Department for companies to wind down their operations before sanctions go into effect - "unless Total is granted a specific project waiver by the US authorities with the support of the French and European authorities".

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They also want to persuade Tehran the 2015 deal - which lifted earlier sanctions on the Islamic Republic in exchange for it curbing its nuclear ambitions - is worth sticking to.

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

For the French company to stay, a project waiver would have to protect the company from "any secondary sanction as per U.S. legislation", it said.

USA banks are involved in more than 90% of Total?s financing operations, Total said, adding that United States assets represent more than $10 billion of capital employed and that 30% of its shareholders are in the US. Officials in China and Russian Federation have indicated they will resist U.S. sanctions and capitalize on the void created if European companies withdraw from the Iranian market.

A gas flare on an Iranian oil production platform.

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Despite the US' withdrawal, the European Union said it would remain committed to the deal and would ensure sanctions on Iran remain lifted, as long as Tehran meets its commitments.

The company also confirmed its 5%/year average production growth target between 2016 and 2022, noting "various growth opportunities which have been captured by Total in recent months."Total also said its actual investment to date with respect to the south Pars contract is less than Eur40 million. With that in mind it's a logical decision", a European diplomat said of Total's decision".

Iran's oil minister Bijan Zanganeh said on May 16 that Tehran would survive the renewed sanctions.

The Chinese major is reportedly ready to take operatorship off Total's hands if the French company formalizes its withdrawal.

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