France's Total Has Officially Left Iran: Oil Minister

French energy giant Total has officially quit its multi-billion-dollar gas project in Iran, Oil Minister Bijan Namdar Zanganeh said on Monday, following the reimposition of US sanctions.

"Total has officially left the agreement for the development of phase 11 of South Pars (gas field)," he told parliament's news agency ICANA, adding that it had been more than two months since the French firm announced it would leave.

Zanganeh also appeared before parliament to underline the dire state of Iran's oil and gas facilities, which he said were "worn out" and in need of renovation that Iran could not afford. 

The United States said in May that it was abandoning the 2015 nuclear deal and reimposing sanctions on Iran in two phases in August and November, with the second targeting the country's vital oil and gas sector.

The other parties to the nuclear deal—Britain, France, Germany, China and Russia—have vowed to stay in the accord but their companies risk huge penalties if they keep doing business in Iran.

Total had already said it would be impossible to remain in Iran unless it received a specific waiver from Washington, which was not granted. 

The French firm signed up in July 2017 for the USD 4.8 billion project to develop the field off Iran's southern coast, as the lead partner alongside the China National Petroleum Corporation (CNPC) and Iran's Petropars. 

It was due to bring state-of-the-art technology to create the pressure needed to tap the gas field, which Iran could then replicate for surrounding fields where pressure has been declining.

Total was due to make an initial USD 1 billion investment, but the company said in May that it had spent less than 40 million euros on the project to date, as uncertainty over US actions mounted. 

The company would have been highly vulnerable to US penalties for remaining in Iran. 

It has USD 10 billion of capital employed in its US assets, and US banks are involved in 90 percent of its financing operations, Total said in May.

Technology Needed

Zanganeh said the process to find a replacement for Total was underway.

But it is unlikely that CNPC or Iran's own firms can take over the project, said Homayoun Falakshahi, an energy analyst for Wood Mackenzie in London.

"The technology Total was hoping to implement would have been world-first, using electricity to compress the gas," he told AFP.

"The other complication is that it needs huge platforms. Iran can build 5,000- to 7,000-tonne platforms. This would have been 20,000 tonnes," he added.

CNPC was suspended from the project once before, in 2011, for failing to make progress. 

The urgent need for investment to upgrade Iran's dilapidated energy infrastructure was a key motivator behind its decision to join the 2015 nuclear deal. 

Zanganeh appeared in parliament on Monday to answer questions on safety concerns following a number of recent fires at refineries. 

"A big part of the oil industry has been worn out and the necessary renovation has not taken place," he told parliament, according to the official IRNA news agency. 

He said there were 10 cases per day of tubes perforating in Iran's southern facilities, and that some refineries were up to 80 years old, "whereas the useful life of an industrial unit is 30 years". 

"We have no resources for renovating them," he added.

But some conservatives in Iran oppose foreign involvement in the strategic energy sector, and have frustrated plans to develop attractive investment contracts.

As a result, the Total deal was the only major investment project finalized after the nuclear deal came into force.

The only other deal was a smaller project with Russia's Zarubezhneft, worth EUR 600 million, to develop two oil fields in western Iran.

Photo Credit: IRNA

Total Says Chances of Iran Sanctions Waiver 'Very Slim'

French oil major Total said Friday the probability of winning an exemption from US sanctions against Iran to continue a major gas field project was very faint.

The energy giant had already warned that, unless Washington granted it a waiver, it would pull out of the South Pars 11 project which it started 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 told companies that they face sanctions if they do business with Iran.

Iran's oil minister on Wednesday gave Total 60 days to win a sanctions waiver from Washington before it would lose its stake in the multi-billion-dollar project.

But on Friday, Total's chairman Patrick Pouyanné told shareholders that the prospect of a sanctions exemption was dim.

"The probability of us getting an exemption is very slim", he said.

Total said earlier this month that it has USD 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 EUR 40 million  (USD 47 million) on the Iranian project, which it runs with its local partners CNPC and Petropars 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.

Meanwhile, Tehran said that Chinese state-owned oil company CNPC will replace Total on the gas project if the French company pulls out.

Photo Credit: IRNA

Iran Sets Sanctions Waiver Deadline for Oil Giant Total

Iran's oil minister on Wednesday gave French energy giant Total 60 days to win a sanctions waiver from Washington or it would lose its stake in a multi-billion-dollar gas project.

"Total has 60 days to negotiate with the US government," said Bijan Zanganeh, according to the oil ministry's Shana news agency. 

"The French government too can have negotiations with the US government during these 60 days for Total to stay in Iran."

Total was the only western firm to finalize an investment deal in Iran's energy sector following the 2015 nuclear deal, from which Washington withdrew earlier this month.

It signed the agreement last July to become the lead partner in a USD 4.8 billion project to develop the South Pars 11 gas field, alongside the China National Petroleum Corporation (CNPC) and Iran's Petropars. 

But after Washington quit the deal and pledged to fully reimpose sanctions by November, Total has said it will be impossible to continue unless it gets a specific waiver from Washington. 

If the French firm fails to win an exemption, CNPC "will replace Total in this project," Zanganeh said.

The oil minister did not explain why the French firm only had 60 days, with US sanctions on foreign energy companies in Iran not due to kick in until November 4. 

Even before Washington pulled out of the nuclear deal, Iran had struggled to attract investment into its oil and gas sector. 

The only other deal was a $742 million (600 million euro) deal with Russian state-owned firm Zarubezhneft to boost production at two oil fields in the western province of Ilam. 

Hardliners in Iran had opposed foreign investment in the energy sector despite the government saying billions were needed to realise its potential. 

"Iran failed to attract much energy investment, even when conditions were at their most favorable," wrote the US Center on Global Energy Policy in a recent briefing note.  

"The country was far too slow in unveiling its new Iran Petroleum Contract, and when it did, potential investors complained that the terms were unattractive."

Photo Credit: IRNA

France's Total To Seek Waiver If US Revives Iran Sanctions: CEO

French energy giant Total will push ahead with a $4.8 billion deal to develop an Iranian gas field and will seek a waiver if Washington re-imposes sanctions, the firm's CEO has said.

US President Donald Trump has threatened to withdraw from a 2015 deal curtailing Iran's nuclear program in exchange for sanctions relief, unless it is "improved" by May 12.

"If the US decides to put back the sanctions, we have to look at what the consequences are," Total chief Patrick Pouyanne said in an interview with Abu Dhabi daily The National published Monday.

"Then we will see, either Donald Trump decides to maintain the waivers and we will move on with the project, (or) we will ask for a waiver from the US authorities."

Defying pressure from Washington, Total signed a deal with Iran in July to head up an international consortium to develop Iran's vast South Pars offshore gas field, alongside China National Petroleum Corporation (CNPC) and Iran's Petropars.

In January, Trump demanded changes to what he has called a "terrible" nuclear deal or the United States would withdraw. European parties to the agreement are desperate to save it and have been scrambling to find ways to persuade Trump not to rip it up.

If Washington does walk away from the deal, Pouyanne said, Total will argue that as the project was "awarded prior to that decision during the period of time that we could sign."

That could allow the firm to benefit from a clause allowing the gas agreement to stand.

Photo Credit: IRNA