French energy major Total announced it will not be in a position to continue and take any further commitment related to the South Pars 11 (SP11) project, following the US withdrawal from the JCPOA, re-imposing the US sanctions that were in force before the JCPOA’s implementation.
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.
Back in July 2017, Total with partner Petrochina executed the contract related to the SP11 project, in full compliance with UN resolutions and US, EU and French legislation applicable at the time.
However, as a result from President Trump’s recently-announced decision to withdraw the US from the JCPOA, the company 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 noted.
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 (US banks are involved in more than 90% of Total’s financing operations), the loss of its US shareholders (US shareholders represent more than 30% of Total’s shareholding) or the inability to continue its US operations (US assets represent more than 10 billion dollars of capital employed).
In these circumstances and in accordance with its contractual commitments vis à vis the Iranian authorities, the company added is engaging with the French and US authorities to examine the possibility of a project waiver.
The JCPOA (Joint Comprehensive Plan of Action) agreement, reached in 2015, between Iran, the EU, and the P5+1 (the five permanent members of the UN Security Council – China, France, Russia, United Kingdom, United States – plus Germany), lifted sanctions on Tehran in exchange for limits to its nuclear programme.
According to estimations, the US move will significantly affect global shipping trade. Earlier in the week, the world’s top two container shipping companies, Danish Maersk Line and Geneva-based MSC, said they were reviewing their Iran operations.