Total has announced that it will not be in a position to continue the South Pars 11 (SP11) project in Iran as a consequence of the United States’ decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) and reinstate the US sanctions that were in force before the JCOPA’s implementation. The company will unwind all related operations before 4 November 2018, unless Total is granted a specific project waiver by US authorities with support of the French and European authorities. This project waiver should include the protection of the company from any secondary sanction as per US legislation.
In 2017, Total had executed the contract related to SP11, together with its partner Petrochina and in full compliance with UN resolutions and US, EU and French legislation acceptable at the time. SP11 is a gas development project dedicated to the supply of domestic gas to the domestic Iranian market and for which Total has voluntarily implemented an IRGC-free policy for all contractors participating in the project, thereby contributing to the international policy to restrain the field of influence of the IRGC.
On 8 May 2018, President Donald Trump announced the United States’ decision to withdraw from the JCPOA and reinstate the US sanctions.
Total has made it clear that it cannot afford to be exposed to any secondary sanction, which might include the loss of financing 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 $10 billion of capital employed).
In these circumstances, Total will not take any further commitment related to the SPI11 project and, in accordance with its contractual commitments vis a vis the Iranian authorities, is engaging with the French and US authorities to examine the possibility of a project waiver.
Total confirmed that its actual spending to date with respect to the SP11 contract is less than 40 million euros in group share. Furthermore, considering the various growth opportunities that have been captured by Total in recent months, Total confirmed that a withdrawal from SP11 would not impact its production growth target of 5% compound annual growth rate between 2016 and 2022.