Iran gives Total 60 days to win US sanctions exemption

Even before the United States pulled out of the nuclear deal, Iran had struggled to attract investment in its oil and gas sector.
Wednesday 30/05/2018
Iranians walking past the stand of French oil and gas company Total during an exhibition in Tehran. (AFP)
Iranians walking past the stand of French oil and gas company Total during an exhibition in Tehran. (AFP)

LONDON - Iran’s oil minister gave French energy giant Total 60 days to win a sanctions waiver from the United States or it would lose its stake in a multibillion-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 finalise an investment deal in Iran’s energy sector following the 2015 nuclear deal, from which Washington withdrew in May.

It signed the agreement last July to become the lead partner in a $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 the United States quit the deal and pledged to fully reimpose sanctions by November, Total said it would be impossible to continue unless it received a specific waiver from Washington.

If the French firm fails to win an exemption, CNPC “will replace Total in this project,” Zanganeh says.

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

Even before the United States 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 one 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 favourable,” wrote the US Centre 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.”

European powers still see the nuclear accord as the best chance of stopping Tehran from acquiring a nuclear weapon and have intensified efforts to save the pact.

Zanganeh said on state television that an agreement with Europe would inspire other potential buyers of Iranian oil.

“Europe is buying only one third of Iranian oil, but an agreement with Europe is important to guarantee our sales and find insurance for the ships ferrying the crude. Other buyers would also be inspired by this,” he said.

Lukoil, Russia’s second-biggest oil producer, said it had decided not to go ahead with plans to develop projects in Iran because of the threat of US sanctions.

Russian President Vladimir Putin said Moscow appreciated efforts by Europe to save the Iran nuclear deal and warned of “lamentable consequences” if it was not preserved.

Putin made the comment in a news conference with French President Emmanuel Macron, offering some support for the French leader’s plan for negotiating a broader agreement with Tehran to cover Iran’s ballistic missile programme and its activities in the Middle East.

“Certainly we can discuss Iran’s ballistic missiles. We can discuss Iran’s policies in the Middle East and its nuclear activities after 2025,” Putin said.

“But we cannot make preserving the Iranian nuclear deal dependent on these three parameters because if we do, it means that we too are withdrawing from the accord because the deal that exists foresees no additional conditions.”

Earlier, it was announced Total would buy a 10% stake in a Russian Arctic gas project, showing the Kremlin’s ability to find foreign partners despite Western sanctions.

“I hope Russia understands France is a credible and trustworthy European partner,” Macron said.

(The Arab Weekly staff and news agencies)