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French Energy Giant Says Will Exit Iran Unless US Sanctions Waived

17 May 2018

French oil major Total warned on Wednesday it will abandon a major gas field project in Iran unless it is exempt from USA sanctions against Tehran.

Total was the first western oil major to sign the Iranian Petroleum Contract with the National Iranian Oil Co., in July 2017.

It signed a deal previous year to develop the South Pars gasfield with an initial billion-dollar investment. Trump's May 8 announcement that he would snap back all sanctions on Iran that were in place before the nuclear deal means that those banks would no longer be accessible to Total, or to any other foreign companies, should they continue to engage in the Iranian marketplace.

Continuing to do business in Iran would be too great a risk as the company has large operations in the USA and depends on the country's banks for financing its operations, Total said in a statement Wednesday.

These renewed sanctions imposed by President Trump have left some major European companies in a quandary as to what to do with their business operations.

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Total SA said it will not risk investing in Iran following the return of US sanctions unless it can secure a waiver.

Underlining the depth of trans-Atlantic discord, the chairman of European Union leaders Donald Tusk said Trump had "rid Europe of all illusions" by withdrawing from the Iran accord and driving trade disputes.

When the Iran agreement was signed and sanctions were ended, Total was among the first corporations to sign business agreements with the Iranian government.

Such a move would be a blow to President Hassan Rouhani, who had hoped the prestigious project could make other worldwide businesses regain confidence in Iran and bring in investment.

But the reach of the USA financial system, the dominance of the dollar and the presence of European companies' operations in the United States all weaken any potential EU measures.

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In Moscow, Deputy Foreign Minister Sergei Ryabkov said Russian Federation supported an European Union proposal to hold a meeting on the Iran deal in Vienna, Interfax news agency said.

"CNPC foresaw a high probability of a re-imposition of U.S. sanctions", another source said.

Total's move is likely to rattle European governments and the European Commission, which warned Trump against acting to punish their businesses operating in Iran under the legitimacy of the nuclear deal they helped broker.

Phase 11 is due to produce 2 billion cubic feet per day of gas and 80,000 barrels per day of condensate, in addition to large amounts of sulphur and other products, starting in 2021.

The EU's top energy official, Commissioner Miguel Arias Canete, is heading to Iran for talks from May 18 to 21 to discuss ways of trying to overcome renewed US sanctions against Iran's oil industry.

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French Energy Giant Says Will Exit Iran Unless US Sanctions Waived