French oil major Total has said it will not be able to continue the South Pars 11 (SP11) project in Iran and will have to unwind all related operations before November 4 unless Total is granted a specific project waiver by the US authorities.

This project waiver should be supported by the French and European authorities and include protection of the Company from any secondary sanction as per US legislation, Total said in a statement on its website.

SP11 is a gas development project dedicated to the supply of domestic gas to the domestic Iranian market and for which Total has voluntarily implemented an IRGC-free policy for all contractors participating in the project, thereby contributing to the international policy to restrain the field of influence of the IRGC.

In July 2017, Total, together with the other partner Petrochina, executed the contract related to the SP11 project, in full compliance with UN resolutions and US, EU and French legislation applicable at the time.

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

In the statement, Total said that it 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 US banks for its worldwide operations (US banks are involved in more than 90 per cent of Total’s financing operations), the loss of its US shareholders (US shareholders represent more than 30 per cent of Total’s shareholding) or the inability to continue its US operations (US assets represent more than $10 billion of capital employed).
 
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 US authorities to examine the possibility of a project waiver, the statement said.
 
Total said that its actual spending to date with respect to the SP11 contract is less than 40 million euros ($47.2 million) in Group share.

Furthermore, considering the various growth opportunities which have been captured by Total in recent months, Total confirms that a withdrawal from SP11 would not impact its production growth target of 5 per cent CAGR between 2016 and 2022. – TradeArabia News Service