Eyeing sanctions, Total considers Iran exit
Iran
PARIS, May 17, 2018 – Total is pausing work on South Pars phase 11 and may have to exit Iran unless it receives a sanctions waiver from the US authorities, the super-major announced on Wednesday.
The announcement regarding the project, whose cost is estimated at nearly USD 5 billion, came after US President Donald Trump announced on May 8 that he would exit a 2015 nuclear accord with Tehran and reimpose sanctions on Iran by November.
“As a consequence 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 US authorities with the support of the French and European authorities,” Total said in a statement.
“Total has always been clear that it cannot afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by US banks for its worldwide operations (US banks are involved in more than 90% of Total’s financing operations), the loss of its US shareholders (US shareholders represent more than 30% of Total’s shareholding) or the inability to continue its US operations (US assets represent more than 10 billion dollars of capital employed).”
Total had previously pledged an initial USD 1 billion of investment in South Pars phase 11. According to a deal signed in July 2017, Total is to operate the project with a 50.1% stake in it alongside partners CNPC (30%) and Petropars (19.9%). Iranian authorities have suggested that CNPC may take over the project if Total withdraws.
In a sign that not all IOCs are spooked by the sanctions, the news also came as National Iranian South Oil Company signed a preliminary agreement with the Pergas UK-based consortium for the development of Karanj onshore field in southwestern Iran, Reuters reported.
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