Total May Turn Its Back On Billion-Dollar Iranian Gas Project Unless Sanctions Are Waived by the US

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Total, the French oil major, may turn its back on the $1bn (£740m) Iranian gas project of the company within six months unless it can secure a waiver for the sanctions for the project from the government of the United States.

The oil group that is backed by the French state said that without an exemption from the United States, it would stop work at the largest gas field in the world and wind down all of its activities by the 4th of November.

The decision of the United States to withdraw from the nuclear deal between an alliance of western powers and Iran was taken earlier in May, despite the opposition from the UK, Germany, and France, and threatens a massive swathe of international business deals.

Total said that it could not afford to breach the looming sanctions of the United States against Iran because of its reliance on American shareholders and banks.

The oil company said that US institutions were involved in 90 percent of its financing operations, and make up 30 percent of its shareholder base. Also, the company operates energy assets of the US that amount to $10bn in spending.

The group stated: “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 gas company was one of the first energy firms to return to Iran after the sanctions of the UN against the country were lifted in early 2016, despite its exposure to Iranian sanctions during the 1990s, which also required a waiver from the US to avoid losing its investments.

A deal was signed by the group to take a 50 percent stake in the South Pars field development, which will have a total amounting to $2bn. Other stakeholders include CNPC, a Chinese state-owned oil and gas company which holds 30 percent, and Iranian state-owned Petropars, which controls 20 percent.

The group says that it was able to spend less than €40m (£34.5m) on the South Pars project and that pulling out of it would not have an impact on its general production growth targets.

The sanctions also endanger to embroil BP, which is attempting to sell the Rhum North Sea field, which is jointly owned with the Iranian Oil Company, to Serica Energy.

The gas field was ordered to close for nearly three years after US-EU sanctions against Iran way back in 2010 before they were able to secure a waiver to allow the gas flows of the field to restart.

Experts in the Industry believe that BP will seek the same route once more to detail emerges over the crackdown of the United States on Iran later in 2018.