French oil giant Total is preparing to pull out of Iran to avoid risking USA sanctions.
Total was the furthest advanced of its European oil major peers in a cautious feeling out of upstream opportunities in Iran since the easing of worldwide sanctions at the start of 2016.
Trump's decision to withdraw from the 2015 nuclear deal with Iran risks exposing European countries that have since invested in Iran to renewed United States sanctions, after "wind-down" periods of three to six months expire.
As a effect, "Complete is not going to be able to proceed the SP11 challenge and should unwind all related operations earlier than four November 2018 except Complete is granted a selected challenge waiver by the U.S. authorities with the assist of the French and European authorities", the French firm mentioned in a press release.
The group said it has $10 billion of capital employed in its United States assets, and USA banks are involved in 90 percent of its financing operations, making Total highly vulnerable if targeted by any U.S. actions.
South Pars phase 11 development is aimed initially at domestic gas demand.
Total also confirmed it is lobbying authorities in both Paris and Washington for a waiver to the U.S. sanctions which are due to come into effect November 5.
Total signed a contract in 2017 to develop phase 11 of Iran's South Pars field with an initial investment of $1 billion, marking the first major Western energy investment in the country after sanctions were lifted in 2016. Its partners in the project are Chinese state oil company CNPC, and Iran's Petropars.
Determined to keep the accord alive, European leaders need to find a way to assure companies that their investments are beyond Washington's extra-territorial reach.
A gas flare on an Iranian oil production platform. Joe Kaesar, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran. But the reach of the US financial system, the dominance of the dollar and the presence of European companies' operations in the United States all weaken any potential EU counter-measures. "They have us by the throat because so much business is conducted and cleared in dollars", one European investment banker said. "With that in mind it's a logical decision", a European diplomat said of Total's decision.