French major Total has warned it plans to withdraw from the South Pars 11 project in Iran if the United States and European authorities fail to grant it a "specific waiver".
The move follows President Donald Trump's decision to withdraw the United States from the global nuclear deal with Iran (JCPOA) and to reinstate the USA sanctions that were in force before the deal's implementation.
Siemens CEO Joe Kaeser told CNN this week that Trump's decision meant his company could not do any new business in Iran.
U.S. banks are involved in more than 90% of Total?s financing operations, Total said, adding that USA assets represent more than $10 billion of capital employed and that 30% of its shareholders are in the US.
The project waiver should include protection of the Company from any secondary sanction as per US legislation, it added.
Since the July 2015 nuclear accord, Total, together with its project partners, has been carrying on tendering for subcontracts and other preparatory work to develop the eleventh phase of the South Pars development, which would supply the domestic market in Iran.
TOT says it has spent less than 40M so far on the project and that a withdrawal would not affect its 5% compound annual growth rate target during 2016-22.
Other European companies including Volkswagen and Airbus have forged business ties with Iran since the breakthrough 2015 deal was signed.
Supporters of the deal, which lifted earlier sanctions on the Islamic Republic in exchange for it curbing its nuclear ambitions, need to find a way to reassure companies that their investments are beyond Washington's extra-territorial reach.
France, Germany and Britain are leading a European effort to safeguard Europe's economic interests in Iran.
"It would be suicide to do any new business or funding for Iran or Iran-related companies without explicit guarantees from the U.S. government".
"We have a situation where there is a will to impose sanctions on Europeans and a resentment towards European companies who are now being accused of supporting a terrorist state".
Total was the furthest advanced of its European oil major peers in a cautious feeling out of upstream opportunities in Iran since the easing of global sanctions at the start of 2016. The deal also restarted foreign trade and investment flows into Iran. "With that in mind it's a logical decision", a European diplomat said of Total's decision.
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