French Energy Giant Says Will Exit Iran Unless US Sanctions Waived

US sanctions against Iran to favour Russian businesses

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.

The French oil major was among the first big western companies to return to Iran after the country emerged from years of isolation linked with its nuclear programme.

The long-anticipated announcement comes as a response to U.S. President Donald Trump's decision to exit the Joint Comprehensive Plan of Action and reinstate economic sanctions against Iran.

Total said the South Pars project puts at risk the company's large operations in the United States and reliance on US banks for financing of 90 percent of its operations. France, Britain and Germany are now in negotiations with Iran to try and "salvage" the deal, which Tehran says can only be achieved if its contracts are protected. The gas was supposed to start flowing into the Iranian market in 2021.

The project waiver should include protection of the Company from any secondary sanction as per USA legislation, it added. "Oil companies are not going to be able to invest in the upstream sector, traders and purchasers of Iranian crude are going to have to find other sources, or seek an exemption from the US government to be able to continue buying".

The company explained that it could not afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by USA banks, the loss of its US shareholders, and the inability to continue its US operations.

Europe to exempt its firms from US sanctions on Iran

In addition, about 14 million barrels of oil products were purchased from, or sold to, entities with ties to the Iranian government, generating 1.1 billion euros of revenue, and a net loss of 5.7 million euros, according to Total. "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said.

"It would be suicide to do any new business or funding for Iran or Iran-related companies without explicit guarantees from the US government".

"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".

The French company said it had so far spent less than 40 million euros ($47 million) on the South Pars project, and that pulling out of it would not impact the company's general production growth targets.

"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".

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. "With that in mind it's a logical decision", a European diplomat said of Total's decision.

Fairfield, Calif., mother faces nine additional felony counts of child abuse
She did not enter a plea, but has denied allegations her kids were abused and Tuesday told reporters she was an "amazing mother". She wrote that Rogers knew about the abuse her children endured but failed to protect them and assisted in the abuse herself.

Latest News