Published: Wed, May 16, 2018
Global News | By Blake Casey

Total may pull out of Iran South Pars project

Total may pull out of Iran South Pars project

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

Total was the furthest advanced of its European oil major peers in a cautious feeling out of upstream opportunities in Iran since the easing of worldwide sanctions at the start of 2016.

On 8 May 2018, President Donald Trump announced the US's decision to withdraw from the JCPOA and to reinstate the United States sanctions that were in force before the JCPOA's implementation, subject to certain wind down periods.

TOT "will not be in a position to continue the SP11 project and will have to unwind all related operations" before November 4 unless it receives a waiver from the US protecting it from sanctions.

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South Pars phase 11 development is aimed initially at domestic gas demand. Due on stream in 2021, the project should also yield around 70,000 b/d of condensate production.

Total said it could not afford to breach the looming U.S. sanctions against Iran due to its reliance on American banks and shareholders.

TOT says it has spent less than 40M so far on the project and that a withdrawal would not affect its 5% compound annual growth rate target during 2016-22.

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 U.S. authorities to examine the possibility of a project waiver.

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