Economy

Energy giant Total pulls out of gas development project in Iran

Energy giant Total pulls out of gas development project in Iran

Paris: Total, the French energy company, will pull out of a multibillion-dollar gas project in Iran if it can not secure a waiver from us sanctions, the company said on Wednesday.

Total underscored it would be highly vulnerable to possible USA sanctions given that the company has a whopping 10 billion dollars of capital employed in its United States assets, while American banks are involved in 90 percent of Total's financing operations.

They also want to persuade Tehran the 2015 deal - which lifted earlier sanctions on the Islamic Republic in exchange for it curbing its nuclear ambitions - is worth sticking to.

Danish oil product shipping operator Maersk Tankers said it would wind down its customer agreements in Iran by November, while German insurer Allianz said on Tuesday it was preparing to wind down Iran-related business. 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 a year ago. The French company said it has spent less than 40 million euros ($47 million) on the project so far.

European Commissioner for Migration and Home Affairs Dimitris Avramopoulos, for his part, said that the EU is discussing "the possibility of applying our blocking statute" to protect the interests of European companies from the re-introduction of United States anti-Iranian sanctions.

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Last week, The US announced re-imposing strict sanctions on Iran, which were lifted in 2016 under the nuclear deal reached between Tehran and the six world powers. The company has a few options if they leave.

In a statement yesterday, it said: "Total will not continue the SP11 (South Pars 11) project and will have to unwind all related operations before November 4, 2018, unless Total is granted a specific project waiver by U.S. authorities with the support..." Total does about 30 percent of its business through the USA banking system.

French oil giant Total is preparing to pull out of Iran to avoid risking USA sanctions. "The EU can't compel or really protect the private sector", Sanam Vakil, associate fellow at Chatham House said of Total's announcement.

Germany, France and the United Kingdom have vowed to stick with the nuclear deal and they're talking to Iranian officials about how to protect the economic benefits it offered Tehran.

Siemens CEO Joe Kaeser told CNN this week that Trump's decision meant his company could not do any new business in Iran. Total has a 50.1 percent stake in the project that develops phase 11 of the South Pars, while China has 30 percent with the remaining shares belonging to Iranian national oil company subsidiary PetroPars.