The projects Total in Iran, hampered by sanctions US

by Bate Felix

PARIS (Reuters) – the withdrawal of The United States of the agreement on the iranian nuclear issue and the restoration of their sanctions against Iran could jeopardize the project investment of several billion dollars of Total (PA:TOTF) in the largest natural gas deposit in the world, at least as the French oil tanker able to obtain a waiver of this plan by the embargo.

Total has signed in July 2017 an agreement with Iran to develop phase 11 of South Pars, with an initial investment of the order of a billion dollars, becoming the first major oil companies to sign a contract in Iran since the agreement over the nuclear issue concluded in July 2015.

Total estimated production capacity of the project up to two billion cubic feet per day, or 400,000 barrels of oil equivalent per day, including condensate. The gas produced is intended to supply the domestic market of iran from 2021.

In addition, Total purchases of iranian oil for its refineries in europe, carries out transactions in us dollars and has invested billions of dollars in the United States, particularly in its refinery in Port Arthur.

The United States announced Tuesday the recovery of a wide range of sanctions on Iran at the end of the transitional periods of 90 to 180 days. According to the u.s. department of Treasury, they will include the oil sector of iran and transactions in dollars with the central bank of the country.

No one was immediately available in Total to comment on the us decision, announced by president Donald Trump.

NEGOTIATIONS WITH THE FRENCH GOVERNMENT

The CEO of Total, Patrick Pouyanné, said in the past that he would seek to obtain a waiver allowing him to continue his activities in the country in the event of a recovery of the u.s. sanctions against Iran.

“If the sanctions are back, we will have to make a request for a derogation”, he said on 19 April last to journalists on the sidelines of a conference.

In the 1990s, the Total had obtained a derogation of this type for the projects in South Pars 2 and 3 in the application of u.s. sanctions to the same period.

The group had then argued, as it might again do so today, that these investments had been made prior to the application of this penalty regime.

Patrick Pouyanné said to have taken steps with the French government and other european capitals to get this new dispensation and thus to protect its investments in Iran.

The French tanker has a share of 50.1% of the project South Pars 11, which represents a total investment of five billion dollars. It is committed to invest a billion dollars to start the project and still have a billion in its development.

According to sources, the Total would have already spent many tens of millions of dollars in studies and tender.

The chinese group CNPC has, for its part, 30% of the project and the company, the national iranian PetroPars the balance of 19.9%.

If Total did not obtain satisfaction, he could cede control of South Pars 11 to the NCPC who would become the operator, according to sources close to the matter.

The French group has reaffirmed several times its commitment in this project, specifying that it will adhere to international law.

(Jean-Michel Belot for the French service, edited by Bertrand Boucey)