French Oil Firm May Leave Iran

South Pars a huge offshore natural gas field shared between Iran and Qatar holds around 14 trillion cubic metres of gas

"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 U.S. banks for its worldwide operations, the loss of its United States shareholders or the inability to continue its USA operations", Total said in a statement. The 20-year development project, of which Total is for now a part of, envisages bringing gas production from the field to 2 billion cu ft of gas daily.

French oil major Total has halted plans to help develop Iran's giant South Pars gas field as it seeks to clarify whether the investment can avoid falling foul of returning USA sanctions on Tehran, the oil company said Wednesday.

Zanganeh said that Total will not face any fine if it withdraws, but the investment it has so far made in the project will not be repaid until full implementation of the project.

Companies caught violating sanctions could be cut off from the United States financial system and targeted with a range of other punishments. The European Union, also a signatory to the atomic deal, has pledged to take steps to salvage the accord.

In a statement, Total said it "will have to unwind all related operations" before November 4, unless it's granted a specific waiver by USA authorities that would protect it against sanctions.


"The risks of being on the wrong side of the USA government are not worth the benefits of trading with Iran, once the sanctions are in place", said Jason Gammel, an analyst at Jefferies LLC. "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said. "There will be niche players who will far more benefit from trading with Iran than risk from the US system, but it's going to be a very small set of players that are not going to be particularly well capitalized".

Under the contract's term, CNPC will take Total's shares in the project if the French company pulls out of the contract, Zanganeh said, Iran's media outlets reported. Managing Director Ali Kardor said this month. It said it had so far spent less than 40 million euros ($47 million) on the project and that pulling out would not impact the company's production growth targets.

In a deal first signed in late 2016, Total agreed to operate the South Pars project with a stake of 50.1%. An additional $1 billion has been committed to the project.

Managing Director of Pergas International Consortium Colin Rowley, and Bijan Alipour, managing director of National Iranian South Oil Co., signed a preliminary deed on the partnership in the presence of British Ambassador Rob Macaire in Tehran on Wednesday night.

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