French oil major Total may turn its back on its $1bn (£740m) Iranian gas project within six months unless it can clinch a sanctions waiver for the project from the USA government.
In a statement, Total said it "will have to unwind all related operations" before November 4, unless it's granted a specific waiver by United States authorities that would protect it against secondary sanctions.
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.
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.More news: John Abraham Roped In For Batla House
Italy's Eni, which last June signed a provisional agreement with Tehran to conduct oil and gas feasibility studies, said after Washington's decision to quit the nuclear deal last week that it had no plans for new projects in Iran.
A gas flare on an Iranian oil production platform.
The project waiver should include protection of the Company from any secondary sanction as per USA legislation, it added. Joe Kaeser, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.
Total has always been clear that it can not afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by USA banks for its worldwide operations (US banks are involved in more than 90% of Total's financing operations), the loss of its U.S. shareholders (US shareholders represent more than 30% of Total's shareholding) or the inability to continue its United States operations (US assets represent more than US$10 billion of capital employed).More news: Rapper TI Arrested After Altercation, Claims He Was 'Wrongfully Arrested'
"It would be suicide to do any new business or funding for Iran or Iran-related companies without explicit guarantees from the USA government".
Background: Despite the US withdrawal, Iranian Foreign Minister Javad Zarif met with European Union leaders on May 15 to discuss how to circumvent USA sanctions in an effort to salvage the nuclear deal.
"The fines are in the multibillions these days so it's just not worth the risk for a small piece of business and maybe pleasing a (European) government".More news: Italy M5S leader says govt deal would be 'bomb' for establishment