French-based oil and gas major Total SA said May 16 that it will have to withdraw from the South Pars 11 natural gas development project in Iran in light of sanctions reimposed on the country by the United States.
On May 8, President Donald Trump announced that the U.S. would withdraw from the 2015 Iran nuclear pact and that sanctions suspended under the deal would resume, leaving businesses that entered into contracts based on the agreement with either 90 days or 180 days to cease those operations.
If Total is not provided a waiver of protection from secondary sanctions by the U.S., the company, which is a partner with Petrochina Co., Ltd. on South Pars 11, will dispose of all of its operations related to the project by Nov. 4.
"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 U.S. banks for its worldwide operations, the loss of its U.S. shareholders, or the inability to continue its U.S. operations," Total said in a May 16 news release.
Total's U.S. assets represent more than $10 billion of capital employed and U.S. banks are involved in 90% of the company's financing.
The company said its withdrawal from the Iranian project will not impact its production growth target of 5% from 2016 through 2022.
