French oil major Total will “abide by the US sanctions” and seek an early exit from its investment in Iran, according to a source familiar with the matter.
“When the US made the decision about the sanctions, Total [was clear] that they would abide by the sanctions,” according to the source. The US imposed the first phase of sanctions over Tehran on August 6, with the full implementation targeting Iran’s energy industry set to come into force on November 4.
The decision leaves in disarray the biggest foreign investment in the Iranian hydrocarbons industry since the country’s 2016 nuclear deal, a $4.8 billion deal signed by lead investor French oil major Total, CNPC as well as local energy contractor Petropars.
The agreement to develop phase 11 of South Pars, the world’s largest gas field, which Iran shares with Qatar, was a major win for the country’s crippled energy infrastructure. Iran sits atop the world’s second biggest reserves for gas after Russia, but is still reliant on imports from neighbouring Azerbaijan and Turkmenistan to help cope with harsh winters since its domestic infrastructure cannot satisfy rising local demand.
The intent of Total to exit Iran comes amid conflicting reports from two separate Iranian news agencies on the handover of the project to China National Petroleum Corporation (CNPC), its co-investor in the gas field.
The comments caused confusion about the position of Total, whose chief executive in an interview with The National in March said the French energy giant would seek a waiver from the US government to continue its operations in Iran.
Analysts familiar with Iran’s hydrocarbons industry and decision-making in the sector said the discrepancy in messages from the NIOC stemmed from the fact that Total was already in the final stages of its exit from Iran, but has to wait for official confirmation.
"Obviously, they are still unsure how to announce it. Since Total’s exit is not finalised, it doesn’t mean that they will not exit and they announced a long time ago that they cannot and will not continue in South Pars phase 11,” said Iman Nasseri, managing director, Middle East at London-based Facts Global Energy.