To­tal may let go of Iran gas to avoid US sanc­tions

The National - News - - BUSINESS - JENNIFER GNANA

French oil ma­jor To­tal may have to con­sider op­tions to sell its stake in a $4.8 bil­lion Ira­nian gas deal to its part­ners to avoid be­ing slapped with US sanc­tions fol­low­ing the Trump ad­min­is­tra­tion’s with­drawal from the Iran nu­clear deal, an­a­lysts said.

To­tal has a 50.1 per cent stake in the 20-year South Pars project, along­side China Na­tional Petroleum, which holds a 30 per cent and Iran’s Petropars with a 19.9 per cent stake.

“To­tal would re­quire ap­ply­ing for the US sanc­tion ex­emp­tion. How­ever, ap­prov­ing such an ex­emp­tion by the US trea­sury seems un­likely and To­tal will very likely have to pull out of the South Pars Phase 11 project and pass its share to CNPC,” said Sia­mak Adibi, head of Mid­dle East gas team at con­sul­tancy FGE. “How­ever, CNPC will also likely com­ply with the US sanc­tions and will ei­ther with­draw or play for time.”

On Wed­nes­day, To­tal said in a state­ment that it would “un­wind all re­lated op­er­a­tions” be­fore the 180-day pe­riod in­di­cated by the Trump ad­min­is­tra­tion for com­pa­nies to stop en­gag­ing with Ira­nian en­ti­ties, fol­low­ing the US exit of the Joint Com­pre­hen­sive Plan of Ac­tion on May 8.

To­tal said it would await “a spe­cific project waiver” from US au­thor­i­ties as nearly 90 per cent of its fi­nanc­ing came from US banks.

“Their stake will go to CNPC and be­hind the cur­tains, there may be a pos­si­bil­ity of To­tal hav­ing the op­tion to come back, if the sit­u­a­tion changes,” said an an­a­lyst who did not wish to be named.

A full exit was un­likely, he added, say­ing that the pos­si­bil­ity of Don­ald Trump’s fail­ure to get re-elected for a sec­ond term as the US pres­i­dent would in­cen­tivise the French oil com­pany to find a way back to its cur­rent in­ter­ests in de­vel­op­ing phase eleven of South Pars, the world’s largest gas field, which Iran shares with Qatar.

To­tal chief ex­ec­u­tive Patrick Pouyanne had said in an in­ter­view with The Na­tional in Feb­ru­ary that should the US not sign a waiver on the com­pany’s in­ter­est in the project, they would seek to ben­e­fit from a “grand­fa­ther clause” as the scheme had been awarded two years prior to the col­lapse of the Iran nu­clear deal.

To­tal’s pos­si­ble exit from Iran comes as a mas­sive blow to Iran’s slowly resur­gent en­ergy in­dus­try, which had looked to the JCPOA as a life­line to push ahead with much needed foreign in­vest­ment and ex­per­tise.

Iran is home to the world’s largest re­serves of gas and is the Mid­dle East’s third-largest oil pro­ducer. Post-EU sanc­tions, Iran man­aged to re­in­state its pro­duc­tion ca­pac­ity to pre-sanc­tions lev­els and had boosted its ex­ports.

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