French energy giant Total to pull out of Iranian gas project

French energy giant Total to pull out of Iranian gas project

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

"Total has always been clear that it can not afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by United States banks for its worldwide operations", the group added.

Total was the first major European company to resume business in Iran after sanctions were lifted in 2016 in exchange for curbs on Iran's nuclear activities.

Total's announcement comes after German insurer Allianz (ALVG.DE) and Danish oil product tanker operator Maersk Tankers said they were winding down their businesses in Iran. So the French energy giant won't commit any more funds to Iran's South Pars 11 project, in which it took a controlling stake previous year.

Total says that it has spent about 40 million euros developing the project to this point.

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

Tehran has repeatedly hailed the Total project as a symbol of the nuclear accord's success at helping to revive and modernize Iran's critical oil and gas industry, which drives the country's economic growth and generates much of the government's revenues.

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President Donald Trump's withdrawal of the United States from the nuclear accord and his order that sanctions be reimposed on Tehran have left European allies scrambling to keep the deal alive and protect their Iranian trade.

The contract for the SP11 contract was signed in July 2017, and Total will unwind all operations related to the project by November 4, 2018, unless the waiver is granted. France, Germany and Britain are leading a European effort to safeguard Europe's economic interests in Iran.

He explained that the French company will not be fined for pulling out of the contract, but added that Total's expenditure on the contract will not be paid back until completion of the project.

European Commission head Jean-Claude Juncker was due to present options to protect European investment, which could include retaliatory sanctions, allowing the European Investment Bank to invest in Iran, and coordinating euro-denominated credit lines from European governments.

Iran's oil minister Bijan Zanganeh said on May 16 that Tehran would survive the renewed sanctions. "With that in mind it's a logical decision".

Joe Kaeser, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.

"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 worldwide policy to restrain the field of influence of the IRGC".

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