France's Total says to ditch Iran gas project if no sanctions waiver

French oil major Total said today it will end work on a major gas field project in Iran unless it is exempt from US sanctions against Tehran that the Trump administration is phasing back in.

Total started the South Pars 11 project in July 2017, two years after Western powers signed a nuclear deal with Tehran prompting the return of many businesses to Iran. But earlier this month, President Donald Trump announced his withdrawal from the deal, and warned companies that they face sanctions if they do business with Iran.

As a consequence, "Total 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," the French company said in a statement.

The group said it has $10 billion of capital employed in its US assets, and US banks are involved in 90 percent of its financing operations, making Total highly vulnerable if targeted by any US actions.

By contrast, Total said it had spent less than 40 million euros ($47 million) on the Iranian project, which it runs with its partner Petrochina and which is dedicated to the supply of domestic gas inside Iran.

A withdrawal from the Iran project would not affect Total's current overall production targets as the group had since opened up other growth opportunities, it said. For the French company to stay, a project waiver would have to protect the company from "any secondary sanction as per US legislation", it said.