Total set to pull out of Iran gas deal without sanctions waiver

Europe to exempt its firms from US sanctions on Iran

SP11 is the biggest proposed project between an global oil company and Iran and if Total withdraws, it will likely deal a significant blow to Tehran.

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.

These renewed sanctions imposed by President Trump have left some major European companies in a quandary as to what to do with their business operations.

TOT "will not be in a position to continue the SP11 project and will have to unwind all related operations" before November 4 unless it receives a waiver from the USA protecting it from sanctions.

USA banks are involved in more than 90% of Total?s financing operations, Total said, adding that U.S. assets represent more than $10 billion of capital employed and that 30% of its shareholders are in the US. The rest of the project is under the ownership of the Iranian state energy company.

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

By contrast, Total said it had spent less than 40 million euros ($47 million) on the Iranian project, which it runs with its partner Petrochina and which is dedicated to the supply of domestic gas inside 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. Upon withdrawing from the agreement, President Trump stated that he will once again impose sanctions on Iran, and companies that wish to do business utilizing the United States banking system will be sanctioned if they continue to do business with Iran after a period of 90 days.

The nuclear agreement, worked out by the United States 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. "With that in mind it's a logical decision", a European diplomat said of Total's decision.

According to Total, US banks are involved in more than 90% of its financing operations. Joe Kaesar, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.

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.

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