What Happened: French oil and energy company Total announced that it may withdraw from the Iran South Pars 11 (SP11) energy project, following U.S. President Donald Trump's decision to pull out of the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action, Reuters reported May 16.
Total was the furthest advanced of its European oil major peers in a cautious feeling out of upstream opportunities in Iran since the easing of global sanctions at the start of 2016.
Total said it could not afford to breach the looming USA sanctions against Iran due to its reliance on American banks and shareholders.
South Pars phase 11 development is aimed initially at domestic gas demand.
For the French firm to remain, a challenge waiver must shield the corporate from "any secondary sanction as per USA laws", it mentioned.
The company said on Wednesday that it was unable to proceed with a $2 billion project to develop the country's giant South Pars gas field. Its partners in the project are Chinese state oil company CNPC, and Iran's Petropars.
Supporters of the deal, which lifted earlier sanctions on the Islamic Republic in exchange for it curbing its nuclear ambitions, need to find a way to reassure companies that their investments are beyond Washington's extra-territorial reach.
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Joe Kaeser, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.
The oil company said United States institutions were involved in 90pc of its financing operations, and make up 30pc of its shareholder base.
It said it had so far spent less than 40 million euros ($47 million) on the project and that pulling out would not impact the company's production growth targets.
"It would be suicide to do any new business or funding for Iran or Iran-related companies without explicit guarantees from the United States government".
"The fines are in the multibillions these days so it's just not worth the risk for a small piece of business and maybe pleasing a (European) government". "With that in mind it's a logical decision", a European diplomat said of Total's decision. Russian Federation has also said it remains committed to the deal.
SP11 is the biggest proposed project between an worldwide oil company and Iran and if Total withdraws, it will likely deal a significant blow to Tehran.