France's Total officially quits Iran, after US reimposes sanctions

French energy giant Total has officially walked away from its multi-billion dollar gas project in Iran, the country's Oil Minister Bijan Namdar Zanganeh said on 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 that it announced that it would leave the contract," he told parliament's news agency ICANA.

Zanganeh also appeared before parliament to underline the dire state of Iran's oil and gas facilities, which he said were "worn out" and in need of renovation that Iran could not afford. 

The United States said in May that it was abandoning the 2015 nuclear deal and reimposing sanctions on Iran in two phases in August and November. 

The second phase will target Iran's oil industry.

The other parties to the nuclear deal - Britain, France, Germany, China and Russia - have vowed to stay in the accord but their companies risk huge penalties if they keep doing business in Iran.

Total had already said it would be impossible to remain in Iran unless it received a specific waiver from Washington, which was not granted. 

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Total signed up in July 2017 for the $4.8 billion (4.1 billion euro) project to develop the field off Iran's southern coast, as the lead partner alongside the China National Petroleum Corporation (CNPC) and Iran's Petropars. 

It was due to make an initial $1 billion investment, but the company said in May that it had spent less than $45.6 million (40 million euros) on the project to date, as uncertainty over US actions mounted. 

Total would have been highly vulnerable to US penalties for remaining in Iran.

The company has $10 billion 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.

The urgent need for investment to upgrade Iran's dilapidated energy infrastructure was a key motivator behind its decision to join the 2015 nuclear deal. 

Agencies contributed to this report. 

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