French Oil Firm May Leave Iran
Last week, President Donald Trump withdrew the United States from the Iran nuclear agreement. This agreement was made in conjunction with several other nations including France, Russia, China and the UK. Upon withdrawing from the agreement, President Trump stated that he will once again impose sanctions on Iran, and companies that wish to do business utilizing the US banking system will be sanctioned if they continue to do business with Iran after a period of 90 days.
These renewed sanctions imposed by President Trump have left some major European companies in a quandary as to what to do with their business operations. One of the companies that now has a major deal in the works with Iran is the French energy giant Total.
When the Iran agreement was signed and sanctions were ended, Total was among the first corporations to sign business agreements with the Iranian government. Total entered into a three-way agreement to develop the South Pars area in Iran for oil and gas exploration. Total owns 50 percent of the project with a Chinese company owning a 30 percent stake. The rest of the project is under the ownership of the Iranian state energy company.
Total says that it has spent about 40 million euros developing the project to this point. However, officials with the company state that they will have to walk away from the project if they are not exempted from the new US sanctions. Total does about 30 percent of its business through the US banking system. They could not afford to be sanctioned by remaining in Iran.
If they are not exempted from the sanctions, Total stated that it will leave Iran by November 4, 2018. The company has a few options if they leave. They could leave the operation dormant and hope that the political climate will change and that the project can be resumed. Total might sell its share to the Chinese company as China is not as dependent on US banking, and the sanctions would not affect them in the same way. Total could also hand the project back to the Iranians who could then sell the interest to another nation.
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