Total, the French energy company, has suspended investment in Iran over concerns about rising political risk, but is still targeting long-term involvement in the country's oil and gas sector. "We cannot invest in Iran for the moment, but Iran remains a priority country, and the National Iranian Oil Company (NIOC) is a long-term partner for us," Lisa Wyler, a company spokesman, said yesterday. The announcement, a day after Iran test-fired a series of missiles following weeks of mounting tensions with the US and Israel over its nuclear ambitions, casts fresh doubt on the Islamic Republic's ability to develop a supply of gas for export from its vast South Pars offshore gasfield. Total has a memorandum of understanding with NIOC to develop phase 11 of South Pars, a giant Gulf project being developed in 25 stages. But in comments to the Financial Times newspaper in the UK, Christophe de Margerie, the chief executive of Total, said it was too risky for the company to invest in Iran in the current political environment. Total, which helped develop an earlier phase of South Pars, had previously said it saw short-term difficulties in reaching a deal for phase 11. Iran had been urging the company to commit to an agreement by the middle of the year. In May, faced with similar pressure to sign contracts, Royal Dutch Shell, the Anglo-Dutch oil and gas company, and Repsol, the Spanish energy concern, pulled the plug on plans to develop phase 13 of South Pars, which had been slated to supply proposed Iranian gas liquefaction facilities. Iran said it would postpone that development and would instead accelerate some other stages of the project. All three European countries had also received advice from their respective governments to curtail investment in Iran in order to support UN sanctions against the Islamic Republic over its controversial nuclear programme. The US believes Iran's insistence on pursuing uranium enrichment indicates that the Gulf state has covert plans to develop nuclear weapons. It has recently stepped up its rhetoric, urging its European allies to back efforts to isolate the Islamic Republic. Gordon Brown, the British prime minister, said the UK would have "no choice but to intensify sanctions" against Iran if the county continued to defy UN resolutions calling for it to suspend nuclear enrichment. "Britain will urge Europe, and Europe will agree to take further sanctions against Iran," he said on Monday. Iran insists its nuclear programme is peaceful, but has rejected UN-mediated offers of Western nuclear technology if it shutters its enrichment programme. The Gulf state, long seen as a potential gas exporter to Asian and European markets, holds the world's second-largest natural gas reserves after Russia. However, its net gas exports are negligible. Meanwhile, Qatar has developed the world's biggest liquefied natural gas (LNG) export business based on gas production from its offshore North Dome gas field, contiguous with South Pars. Together, the Qatari and Iranian fields form the world's biggest single hydrocarbon deposit. Gholamhossein Nozari, the Iranian oil minister, said Total's decision would not derail Iran's gas development plans. "This is our message: we will proceed with development with or without them," he said. Still, analysts doubt that Iran could build functional LNG facilities without access to proprietary technology held by a handful of Western oil companies. Total was the last such company to consider investing in South Pars. Other European energy companies still operating in Iran include Italy's Eni and Norway's StatoilHydro. Statoil, which is well advanced in the development of South Pars phases six, seven and eight, to supply gas for reinjection into ageing Iranian oil fields, said yesterday it would complete its contracts. Eni said it did not plan new investments in Iran. That has left Iran heavily dependent on non-Western energy partners - including the Russian gas monopoly, Gazprom, and the Malaysian state-owned Petronas Gas - to help it develop South Pars and other big energy projects. But these companies are technologically outclassed by their Western rivals, analysts said. Politics may not be the only factor that has led the West to pull out of Iran's energy sector. The "buyback" contracts favoured by Iran for energy development provide scant financial incentives for foreign partners. email@example.com
France's Total suspends its investment in Iran
Total has suspended investment in Iran over concerns about rising political risk.