Wednesday, 16 January, 2019

Total poised to pull out of Iran's SP11 project without U.S. waiver

Protesters stand outside the White House in Washington DC on May 8 as US President Donald Trump announces the United State's withdrawal from the Iran nuclear deal Europe to exempt its firms from US sanctions on Iran
Ginger Lawrence | 17 May, 2018, 04:47

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 US protecting it from sanctions.

However, officials with the company state that they will have to walk away from the project if they are not exempted from the new USA sanctions.

The move follows President Donald Trump's decision to withdraw the United States from the global nuclear deal with Iran (JCPOA) and to reinstate the U.S. sanctions that were in force before the deal's implementation.

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".

Washington is re-imposing strict sanctions on Iran, which were lifted under the 2015 deal to curb the country's nuclear ambitions. The rest of the project is under the ownership of the Iranian state energy company. "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said.

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.

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"The fines are in the multibillions these days so it's just not worth the risk for a small piece of business and maybe pleasing a (European) government".

Total's announcement comes after Denmark's Maersk, which operates oil tankers globally, said it would fulfil commitments in Iran already on its books but would not enter into any new contracts.

"We have a situation where there is a will to impose sanctions on Europeans and a resentment towards European companies who are now being accused of supporting a terrorist state".

Total says that it has spent about 40 million euros developing the project to this point. Joe Kaesar, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.

Trump's decision to withdraw from the 2015 nuclear deal with Iran risks exposing European countries that have since invested in Iran to renewed USA sanctions, after "wind-down" periods of three to six months expire.