Business

China ready to replace Total in Iran

China ready to replace Total in Iran

Total has said it will quit a giant gas project in Iran after American sanctions were reapplied this month.

Total said it will unwind operations by November unless sanctions are waived.

They also want to persuade Tehran the 2015 deal - which lifted earlier sanctions on the Islamic Republic in exchange for it curbing its nuclear ambitions - is worth sticking to.

Total's announcement comes after German insurer Allianz (ALVG.DE) and Danish oil product tanker operator Maersk Tankers said they were winding down their businesses in Iran. Total entered into a three-way agreement to develop the South Pars area in Iran for oil and gas exploration.

The French company said it had so far spent less than 40 million euros ($47 million) on the South Pars project, and that pulling out of it would not impact the company's general production growth targets.

European Commissioner for Migration and Home Affairs Dimitris Avramopoulos, for his part, said that the EU is discussing "the possibility of applying our blocking statute" to protect the interests of European companies from the re-introduction of U.S. anti-Iranian sanctions.

Total's announcement is in line with previous claims that it may be unable to conduct business in Iran should the U.S. bow out of the Iran nuclear deal and levy sanctions against Iran.

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Total said it "is engaging with the French and US authorities to examine the possibility of a project waiver". "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said.

While the French company was speaking about a natural gas project, its reluctance to continue operating there could equally apply to others that rushed back into sectors from automobiles to aviation and engineering to the oil trade.

European Commission head Jean-Claude Juncker was due to present options to protect European investment, which could include retaliatory sanctions, allowing the European Investment Bank to invest in Iran, and coordinating euro-denominated credit lines from European governments.

An official in the French finance ministry said "precise requests" were being lodged with the US authorities, including for Total, and that the company's decision was not a surprise.

Siemens CEO Joe Kaeser told CNN this week that Trump's decision meant his company could not do any new business in Iran.

The Phase 11 contract will automatically go to Total's consortium partner China National Petroleum Corporation (CNPC) and local player Petropars if the French player does pull out, Iranian officials have previously said.


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