Total says unable to continue South Pars project
Paris. French oil and energy company Total said on Wednesday it could not continue with the Iran South Pars 11 (SP11) project, in light of a decision by US President Donald Trump to withdraw from an international nuclear deal with Iran.
“On 8 May 2018, President Donald Trump announced the United States’ decision to withdraw from the JCPOA (nuclear agreement) and to reinstate US sanctions that were in force before the JCPOA’s implementation, subject to certain wind down periods,” Total said in a statement, Reuters reported.
It added that as a consequence, Total will not continue the SP11 project and will have to unwind all related operations before 4 November 2018, unless Total is granted a specific project waiver by US authorities with the support of the French and European authorities.
On 4 July 2017, 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. SP11 is a gas development project dedicated to the supply of domestic gas to the domestic Iranian market
In a press release Wednesday 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 (US banks are involved in more than 90% of Total’s financing operations), the loss of its US shareholders (US shareholders represent more than 30% of Total’s shareholding) or the inability to continue its US operations (US assets represent more than 10 billion dollars of capital employed).
In these circumstances, Total will not take any further commitment related to the SP11 project and, in accordance with its contractual commitments vis à vis the Iranian authorities, is engaging with the French and US authorities to examine the possibility of a project waiver, the press release said.