Total to drop billion-dollar Iranian gas project unless USA waives sanctions

Europe to exempt its firms from US sanctions on Iran

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.

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.

As a outcome, and as already explained before, 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.

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

Background: Despite the US withdrawal, Iranian Foreign Minister Javad Zarif met with European Union leaders on May 15 to discuss how to circumvent USA sanctions in an effort to salvage the nuclear deal.

The nuclear agreement, worked out by the USA 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.

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

In an ironic twist, Trump's decision to threaten European companies that continue to invest in Iran may open the door to Chinese rivals.

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

But the reach of the USA 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.

"Total has always been clear that it can not afford to be exposed to any secondary sanction which might include the loss of financing in dollars by United States banks for its worldwide operations", the group said. It also has significant operations and a large number of shareholders in the United States.

"But given the rhetoric we have seen from the USA, they seem very keen to ramp up the pressure on the administration in Iran", said Tuvey.

Companies are starting to take matters into their own hands as European and some other governments struggle to save the Iran deal.

The French state-backed oil group said that without an exemption from the USA it would halt work at the world's largest gas field and wind down all its activities by November 4.

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