Total seeks exemption from US sanctions for Iran gas project

Daniel Fowler
May 17, 2018

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.

French oil major Total warned on Wednesday it will abandon a major gas field project in Iran unless it is exempt from USA sanctions against Tehran.

As a effect, "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", the French company said in a statement.

The total project, which also involves China 's CNPC and Iranian company Petropars, is estimated to be around $2 billion for the first phase.

The announcement shows how European companies are starting to take matters into their own hands as their leaders struggle to save an global nuclear deal with Iran after the United States withdrew and said it would reinstate sanctions on Tehran.

The deal - championed by former President Barack Obama - was created to limit Iran's nuclear program in exchange for lifting some sanctions, allowing Iran to boost oil exports. Russian Federation has also said it remains committed to the deal.

France, Britain and Germany had vowed earlier this week to keep the 2015 nuclear deal alive by trying to keep Iran's oil and investment flowing, but admitted they would struggle to provide the guarantees Tehran seeks.

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

Companies caught violating sanctions could be cut off from the U.S. financial system and targeted with a range of other punishments.

The company said American banks are involved in over 90% of its financing.

The project waiver should include protection of the Company from any secondary sanction as per USA legislation, it added. It also has significant operations and a large number of shareholders in the United States.

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

Total's prospects of securing a waiver that would allow it to continue with the South Pars deal look slim.

Other European companies including Volkswagen and Airbus have forged business ties with Iran since the breakthrough 2015 deal was signed.

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