French oil gi­ant to exit Iran

Jerusalem Post - - FRONT PAGE - • By MICHAEL WIL­NER Jerusalem Post Cor­re­spon­dent

WASH­ING­TON – To­tal SA, the first ma­jor oil and gas com­pany to sign a deal with Tehran af­ter the Is­lamic Re­pub­lic’s nu­clear agree­ment with world pow­ers took ef­fect in 2016, “will not be in a po­si­tion to con­tinue” its work in Iran in light of US Pres­i­dent Don­ald Trump’s de­ci­sion to with­draw from the ac­cord, the firm said on Wed­nes­day.

The French oil gi­ant re­lies heav­ily on US fi­nan­cial in­sti­tu­tions, with more than 90% of its trans­ac­tions han­dled by Amer­i­can banks. Trump’s May 8 an­nounce­ment that he would snap back all sanc­tions on Iran that were in place be­fore the nu­clear deal means that those banks would no longer be ac­ces­si­ble to To­tal, or to any other for­eign com­pa­nies, should they con­tinue to en­gage in the Ira­nian mar­ket­place.

To­tal’s move is likely to rat­tle Eu­ro­pean gov­ern­ments and the Eu­ro­pean Com­mis­sion, which warned Trump against act­ing to pun­ish their busi­nesses op­er­at­ing in Iran un­der the le­git­i­macy of the nu­clear deal they helped bro­ker. France, Bri­tain and

Ger­many are now in ne­go­ti­a­tions with Iran to try and “sal­vage” the deal, which Tehran says can only be achieved if its con­tracts are pro­tected.

To­tal’s $2 bil­lion deal with Tehran was in part­ner­ship with Petrochina, a sub­sidiary of China’s largest oil and gas com­pany, CNPC. The Chi­nese have in­di­cated they will take over To­tal’s stake in the pro­ject should it choose to leave.

To­tal “will have to un­wind all re­lated op­er­a­tions be­fore 4 Novem­ber 2018,” the com­pany said, re­fer­ring to a dead­line set by the US Trea­sury Depart­ment for com­pa­nies to wind down their op­er­a­tions be­fore sanc­tions go into ef­fect – “un­less To­tal is granted a spe­cific pro­ject waiver by the US au­thor­i­ties with the support of the French and Eu­ro­pean au­thor­i­ties.”

The Trump ad­min­is­tra­tion has al­ready been asked whether To­tal, one of the seven largest oil com­pa­nies in the world, will re­ceive such a waiver. National Se­cu­rity Ad­viser John Bolton told re­porters he would not dis­cuss spe­cific cases but in­di­cated that no waivers would be forth­com­ing.

“In the case of oil pur­chases from Iran,” Bolton said, “if it’s a long-term requirements con­tract... what we’re say­ing is that although the sanc­tions come back into ef­fect im­me­di­ately, pre­clud­ing any new con­tracts, for those af­fected by our ju­ris­dic­tion, they’ve got six months to phase it out.”

“That’s why it’s called ‘wind­down,’” he added. “It’s a way to give busi­nesses a chance to get out.”

Sev­eral other oil and gas com­pa­nies face sim­i­lar chal­lenges, in­clud­ing many of the largest play­ers based in Ger­many, Aus­tria, Nor­way, Italy, South Korea and In­dia. Of­fi­cials in China and Rus­sia have in­di­cated they will re­sist US sanc­tions and cap­i­tal­ize on the void cre­ated if Eu­ro­pean com­pa­nies with­draw from the Ira­nian mar­ket.

In its state­ment, To­tal said it was re­quest­ing a waiver that would pro­tect it from all “sec­ondary” sanc­tions un­der US leg­is­la­tion, and that it had en­gaged US and French au­thor­i­ties to “ex­am­ine the pos­si­bil­ity” of an ex­emp­tion. Also known as ex­trater­ri­to­rial sanc­tions, these “sec­ondary sanc­tions” laws passed dur­ing a peak of the nu­clear cri­sis in 2010-13 were meant to force non-US com­pa­nies to choose be­tween the US and Ira­nian mar­ket­places.

“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 US banks for its world­wide op­er­a­tions, the loss of its US share­hold­ers or the in­abil­ity to con­tinue its US op­er­a­tions,” the com­pany said. •

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