French petroleum refining company Total stated it will shut down its operations in Iran as the US sanctions were revamped. On 8th May 2018, President Donald Trump announced the United States’ decision to withdraw from the JCPOA and to reinstate the US sanctions that were in force before the JCPOA’s implementation, subject to certain wind down periods. While Total is speculating to shut down its operations, German insurer Allianz and Danish conglomerate company Maersk are also unplugging their businesses in Iran.
As a consequence and as already explained before, Total confirmed it will not be in a position to continue the SP11 project and will have to unwind all related operations before 4th November, 2018 unless the company is granted a specific project waiver by the US authorities with the support of the French and European authorities. This project waiver should include protection of the company from any secondary sanction as per US legislation.
The oil and gas company specified it cannot afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by US banks for its worldwide operations (US banks are involved in more than 90% of Total’s financing operations), the loss of its US shareholders (US shareholders represent more than 30% of Total’s shareholding) or the inability to continue its US operations (US assets represent more than US$10bn of capital employed).
In these circumstances, Total will not take any further commitment related to the SP11 project and, in accordance with its contractual commitments vis-à-vis the Iranian authorities, is engaging with the French and US authorities to examine the possibility of a project waiver.
Total confirms that its actual spending to date with respect to the SP11 contract is less than 40mn euros in Group share. Furthermore, considering the various growth opportunities which have been captured by Total in recent months, Total confirms that a withdrawal from SP11 would not impact its production growth target of five percent CAGR between 2016 and 2022.