Exclusive: Total to apply for waiver if US withdraws from Iran deal

The French major was the first Western entity to sign a deal with Tehran after the lifting of sanctions

Total chief executive Patrick Pouyanné had earlier said chances were "very slim" to secure a waiver for continued investment in Iran. AP

French oil major Total is committed to the development of an Iranian gasfield and will apply for a waiver if US President Donald Trump unilaterally withdraws from the 2015 Iran nuclear deal and re-imposes sanctions on Tehran, the company’s chief executive said.

“If the US decides to put back the sanctions, we have to look at what the consequences are…and then we will see, either Donald Trump decides to maintain the waivers and we will move on with the project,” Patrick Pouyanne said in an interview in Abu Dhabi on Sunday. “If the US decides not to sign the waiver, then what will be our position, it’s quite simple - as the project has been awarded prior to that decision during the period of time that we could sign … we will argue that we should benefit from the grandfather clause and we will ask for a waiver from the US authorities.”

In July last year, Total became the first Western energy company to sign a deal with Iran when it agreed as part of a 20-year contract to develop phase 11 of the country’s South Pars field, the world’s largest gasfield that is shared with Qatar. The project will have a production capacity of 2 billion cubic feet per day or 400,000 barrels of oil equivalent per day including condensate. The produced gas will supply the Iranian domestic market starting in 2021.

In January, Mr Trump set May 12 as the deadline to decide whether the US will re-impose sanctions that were lifted as part of the Joint Comprehensive Plan of Action (JCPOA) nuclear deal that curbed Iran’s nuclear programme. He said European countries that are party to the agreement must address “terrible flaws of the Iran nuclear deal.”

The ultimatum has pressed Britain, France and Germany to seek ways that will mollify the American president and preserve the deal. The three European countries are considering a new set of sanctions that target Iran’s ballistic missiles and Tehran’s role in Syria’s seven-year civil war, Reuters reported on Saturday.

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Iran has propped up the regime of Bashar Al Assad and is accused of meddling in the internal affairs of regional Arab countries and backing Houthi rebels in Yemen.

In the wider context “Total is a small matter of a contract…it's more the diplomatic tension,” said Mr Pouyanne. “What is more important is the debate, a consequence of the negative US decision on the stability of the region.”

Prior to the nuclear agreement, Iran’s economy was crippled by years of sanctions that led to hyperinflation and drying up of foreign investment. The country, which relies on oil revenue saw its crude production fall to about 2.5 million bpd with exports limited to a million barrels a day. The nuclear agreement allowed Iran to nearly double its oil and condensate production to 3.8 million bpd allowing it to boost its foreign exchange reserves. The government's budget continues to rely on oil receipts for about 40 per cent of its total revenue, according to the International Monetary Fund.

“Our intent is to do all that we can to execute the contract that we signed…. We have good arguments to explain…This contract, it’s a contract for domestic gas to help the people in Iran. It’s not an export contract,” said Mr Pouyanne.

“I can also tell you that we were very clear and the teams worked very hard…not to see any interests of revolutionary organisations involved," he said.

After the sanctions were lifted, Tehran approved shortlisted contractors that were not affiliated with Iran's Revolutionary Guard in a bid to attract oil and gas companies who wanted to avoid falling afoul with the US government.

"We have done the best on our side in order to comply with the highest level of requirement … we will see what the US and European governments decide," said Mr Pouyanne.

"Today the priority is to concentrate on South Pars and…be able to execute that contract… It’s a very serious situation for the stability of the region.”