Iran says French oil giant Total has officially left the country
French energy company Total has officially quit its multi-billion-euro gas project in Iran following the reimposition of US sanctions, the Middle Eastern country’s Oil Minister Bijan Namdar Zanganeh said Monday.
"Total has officially left the agreement for the development of phase 11 of South Pars [gas field]. It has been more than two months since it announced that it would leave the contract," Zanganeh told parliament's news agency ICANA.
The withdrawal of the French energy giant, and its planned investments totalling billions of euros there, may prove to be a blow to the Middle Eastern country's oil and gas sectors, which Zanganeh says are in dire need of renovation.
"A big part of the oil industry has been worn out and the necessary renovation has not taken place," he told parliament, according to the official IRNA news agency.
Zanganeh said there were 10 cases per day of tubes perforating in Iran's southern facilities, and that some refineries were as much as 80 years old, "whereas the useful life of an industrial unit is 30 years".
"We have no resources for repairing them," he added.
Total's withdrawal comes about three months after the US announced it was abandoning the 2015 nuclear deal and reimposing sanctions on Iran in two phases in August and November. The company had asked Washington for an exemption in order to avoid heavy US penalties, but their request was not granted.
High hopes dashed
In July 2017, Total signed up to a 4.1-billion-euro project to develop the South Pars gas field off Iran's southern coast. It would have been the lead partner alongside the China National Petroleum Corporation (CNPC) and Iran's Petropars.
It was due to make an initial investment of some 876 million euros. But the company said in May that uncertainty over US sanctions had led it to spend less than 40 million euros on the project to date.
Total would have been vulnerable to US penalties for remaining in Iran. The company has roughly 8.8 billion euros of capital employed in its US assets, and US banks are involved in 90 percent of its financing operations, Total said in May.
It remains unclear whether CNPC will take over Total's stake in the project.
Iran remains wary of relying on Chinese firms after bad experiences in the past. A previous contract for CNPC to develop the field at South Pars was suspended in 2011 after it failed to make progress.
Daily newsletterReceive essential international news every morningSubscribe