In a massive blow to Iran’s economy, French oil giant Total confirmed that it has not accepted any gas exploration commitments in the southern Pars field.
Total issued a statement on Wednesday on the future of its oil projects in Iran stating that the decision came after President Donald Trump’s announcement to withdraw from the JCPOA.
Total, together with the other partner Petrochina, executed the contract related to the South Pars 11 (SP11) project, in full compliance with UN resolutions and US, EU and French legislation applicable at the time,” the statement said.
“SP11 is a gas development project dedicated to the supply of domestic gas to the domestic Iranian market and for which Total has voluntarily implemented an IRGC-free policy for all contractors participating in the project, thereby contributing to the international policy to restrain the field of influence of the IRGC.”
The company added that it will not be able to continue operations unless it is given a project waiver by US authorities, with the support of French and European authorities.
“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, the loss of its US shareholders or the inability to continue its US operations,” they said.
Meanwhile, Iran has said Chinese state-owned oil company CNPC will replace Total on the project if the French energy giant pulls out over renewed US sanctions against Tehran, Iran’s oil minister has said.
“Total has said that if it doesn’t get an exemption from the United States to continue its work, it will begin to pull out of the deal,” Bijan Namdar Zanganeh was quoted as saying by his ministry’s Shana news service.
“If that happens, the Chinese firm CNPC will replace Total.”
Total started the $4.8-billion South Pars 11 project in July 2017, two years after Western powers signed a nuclear deal with Tehran prompting the return of many businesses to Iran.
But earlier this month, US President Donald Trump announced his withdrawal from the deal, and warned companies that they face sanctions if they do business with Iran.
The French group said Wednesday it has $10 billion of capital employed in its US assets, and US banks are involved in 90 percent of its financing operations, making Total highly vulnerable if targeted by any US actions.
By contrast, Total said it had spent less than 40 million euros ($47 million) on the Iranian project, which it runs with its partner Petrochina and which is dedicated to the supply of domestic gas inside Iran.
Zanganeh said on Wednesday that were CNPC, which was part of the Total deal, unable to carry out the work in South Pars due to US sanctions it would fall to Iran’s Petropars.
Iran possesses the second-largest gas reserves on the planet, after Russia, and the fourth largest oil supplies.
Source: AP, Yahoo news