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Total Works On Iran Gas Project Despite Uncertainty Over U.S. Sanctions

Total offices

France’s supermajor Total SA continues to work on the South Pars gas project in Iran despite the uncertainty over potential new U.S. sanctions on Iran, Total’s chief executive Patrick Pouyanne told French newspaper Le Monde in an interview published on Tuesday.

In July last year, Total signed a contract to develop phase 11 of the South Pars gas field in Iran—the world’s biggest gas field—marking the first Iranian Petroleum Contract (IPC) with a Western major since most sanctions on Iran were lifted. Total holds a 50.1-percent interest and is the operator of the South Pars 11 (SP11) project, while CNPC has 30 percent, and Petropars, a wholly owned subsidiary of the National Iranian Oil Company (NIOC), owns the remaining 19.9 percent.

After Total signed the deal with Iran, the U.S-Iran tensions have further increased, posing additional uncertainty for European companies invested in or planning to invest in Iran.

Last month, U.S. President Donald Trump—who must waive sanctions on Iran every three months as per authority given to the U.S. President by U.S. law—waived the application of nuclear sanctions, but warned that this could be the last such waiver.

“Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal. This is a last chance,” President Trump said.

Speaking to Le Monde, Total’s Pouyanne said that Total’s work on the South Pars project was “progressing well, without delay, and (Total) continues to work, even if the situation with the American Congress is rather vague.”

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Total has been holding talks with French and European authorities about the “means to protect investments already made in Iran, even in the case of the return of sanctions”, Pouyanne said.

In November 2017, Iran’s oil minister Bijan Zanganeh warned that if Total decided to leave the contract without the enforcement of UN Security Council sanctions, no capital would be returned to Total.

In December, reports suggested CNPC was mulling the taking over of the majority stake in South Pars from Total if the French company walked out of Iran in its attempt to comply with possible new U.S. sanctions.

By Tsvetana Paraskova for Oilprice.com

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