Total said today that unless it is granted a specific waiver for its huge South Pars 11 (SP11) energy project in Iran it will have to wind down all related operations.
The news follows President Donald Trump’s announcement on 8 May that the United States is to withdraw from the Joint Comprehensive Plan of Action (JCPOA) agreement and reinstate US sanctions against Iran that were in force before the JCPOA’s implementation, subject to certain wind down periods.
“Total will not be in a position to 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 the US authorities with the support of the French and European authorities. The project waiver should include protection of the company from any secondary sanctions as per US legislation,” Total said in a statement today.
The company and partner Petrochina on 4 July 2017 executed the contract covering the SP11 project in full compliance with UN resolutions and US, EU, and French legislations applicable at the time. SP11 is a gas development project dedicated to the supply of domestic gas to the Iranian market. Total says it cannot afford to be exposed to any secondary sanctions, 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, which represent more than 30% of Total’s shareholding; or the inability to continue its US operations. US assets represent more than $10 billion of Total’s capital employed.
Total says it will not make any further commitment related to the SP11 project and, in accordance with its contractual commitments vis a vis the Iranian authorities, is engaging with French and US authorities to examine the possibility of a project waiver.
Total has to date spent less than €40 million ($47.2 million) on the SP11 project. It says that a withdrawal from SP11 would not impact its production growth target of 5% of compounded annual growth rate between 2016 and 2022.
By Natasha Alperowicz
Source: Chemical Week
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