US JCPOA withdrawal pushes Total to drop South Pars 11 plans

France’s Total SA has dropped plans for South Pars 11 (SP11), a gas development project to supply gas within Iran following US President Donald Trump’s announcement that the US will withdraw from the Joint Comprehensive Plan of Action (JCPOA) and reinstate sanctions.

 

PetroChina was a partner on the project.

 

The company will not be in a position to continue the project and will have to unwind all related operations before the 4th November4 unless it is granted a specific project waiver by US authorities with the support of the French and European authorities.

 

Such a waiver must include protection from any secondary sanction, the company said, as it cannot afford exposure 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$10 billion of capital employed).

 

In accordance with its contractual commitments vis a vis the Iranian authorities, the company is engaging with the French and US authorities to examine the possibility of a project waiver.

 

Actual spending to date with respect to the contract is less than €40 million in group share and withdrawal would not impact the company’s production growth target of 5% CAGR between 2016 and 2022, the company said.

 

South Pars has an estimated 21 tcf of gas in place, and Wood Mackenzie estimates SP11 could recover more than ten tcf of sweetened gas with 450 million bbl of condensate.

 

Source: Oil & Gas Journal