French oil major Total warned on Wednesday it will abandon a major gas field project in Iran unless it is exempt from U.S. sanctions against Tehran.
Total's position shows how hard it will be for European powers to safeguard their interests inIran and offer guarantees to save the nuclear deal.
SP11 is the biggest proposed project between an global oil company and Iran and if Total withdraws, it will likely deal a significant blow to Tehran.
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On 8 May 2018, President Donald Trump announced the US's decision to withdraw from the JCPOA and to reinstate the USA sanctions that were in force before the JCPOA's implementation, subject to certain wind down periods.
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.
Against this, Complete mentioned it had spent lower than 40 million euros ($47 million) on the Iranian challenge, which it runs with its associate Petrochina and which is devoted to the provision of home gasoline inside Iran.
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For the French firm to remain, a challenge waiver must shield the corporate from "any secondary sanction as per U.S. laws", it mentioned.
Supporters of the deal, which lifted earlier sanctions on the Islamic Republic in exchange for it curbing its nuclear ambitions, need to find a way to reassure companies that their investments are beyond Washington's extra-territorial reach.
Iran has said it may start enriching uranium again if it can no longer see any economic benefit from sticking to the deal.
Total's announcement comes after German insurer Allianz and Danish oil product tanker operator Maersk Tankers said they were winding down their businesses in Iran. Joe Kaeser, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.
The group said it has $10 billion of capital employed in its U.S. assets, and USA banks are involved in 90 percent of its financing operations, making Total highly vulnerable if targeted by any United States actions. "With that in mind it's a logical decision", a European diplomat said of Total's decision.
Since the July 2015 nuclear accord, Total, together with its project partners, has been carrying on tendering for subcontracts and other preparatory work to develop the eleventh phase of the South Pars development, which would supply the domestic market in Iran.
CNPC has a 30% stake in the venture, with Petropars at 19.9%, leaving Total with an operatorship of 50.1%.