French oil major Total has announced that it will not be able to continue with the contract related to the South Pars 11 (SP11) project unless it gets a waiver protecting it from U.S. sanctions after the Trump administration pulled out of the nuclear deal.
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 South Pars 11 (SP11) project, in full compliance with UN resolutions and US, EU and French legislation applicable at the time.
On 8 May 2018, President Donald Trump announced the United States’ 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 a statement Total said it will not be in a position to continue the SP11 project and will have to unwind all related operations before 4 November 2018 unless Total is granted a specific project waiver by the US authorities with the support of the French and European authorities. This project waiver should include protection of the Company from any secondary sanction as per US legislation.
Total has always made it clear that it would not continue with the project if there were any 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 dollars of capital employed).
Total stated that its actual spending to date with respect to the SP11 contract is less than 40 million euros in Group share.