On July 4, 2017, the company and partner Petrochina executed their contract related to the project, in compliance with UN resolutions and US, EU, and French legislation applicable at the time.
Total had voluntarily implemented an Islamic Revolutionary Guard Corps (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.
However, earlier this month US President Donald Trump announced the US’ withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and his decision to reinstate the conditions that were in place prior to the JCPOA implementation, subject to certain wind-down periods.
Therefore, Total says it will not be able to continue SP11 and will have to unwind all related operations before Nov. 4, 2018, unless granted a specific project waiver by the US authorities with the support of the French and European authorities.
This waiver, it stressed, should include protection of the company from any secondary sanction as per US legislation.
Total says it has always been clear that it cannot afford to be exposed to any secondary sanction, 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 (which represent more than 30% of Total’s shareholding); or the inability to continue its US operations (as US assets represent more than $10 billion of capital employed).
For these reasons it will not make any further commitments related to the SP11 project and, in accordance with its contractual commitments vis à vis the Iranian authorities, is engaging with the French and US authorities on a possible project waiver.
Total’s expenditure for the SP11 contract to date has been less than Eur40 million ($47 million), and the company says withdrawal would not impact its production growth target of 5% CAGR between 2016 and 2022.