French oil and gas company Total has reportedly abandoned the $4.8bn South Pars 11 (SP11) gas field project offshore Iran in response to US sanctions.
This move followed after the company failed to secure waivers related to Iran sanctions from the US administration.
The company entered the deal to develop the gas project in July last year in partnership with China National Petroleum (CNPC) and Iran’s Petropars.
SP11 is dedicated to the supply of domestic gas to the Iranian market.
The US Government has pulled out of the Iran nuclear deal, which was reached in 2015. It allowed lifting of certain restrictions on the nation in exchange for the abandonment of its nuclear weapons programme.
The US also announced that it would reintroduce sanctions on Iran, meaning companies will be barred from operating in the country or subjected to fines and other actions.
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The French company indicated in May this year that it would be forced to quit the project if the US administration did not grant a specific waiver to SP11. The company noted that continuing its interest in the project could pose risks such as the loss of financing by US banks, the loss of its US shareholders or sanctions on its operations in the US.
AFP quoted Total as saying: “Total has notified the Iranian authorities of its withdrawal from the contract following the 60-day deadline for obtaining a potential waiver from the US authorities.
“Despite the backing of the French and European authorities, such a waiver could not have been obtained.”
The Iranian Government is now working to find a new partner for the development of the South Pars gas field, which is located on the joint border line between Iran and Qatar in the Persian Gulf.
Iran’s section of the field is estimated to contain around 14 trillion cubic metres of gas and 18 billion barrels of liquefied natural gas (LNG).