Total’s Decision on Iran Gas Project Depends on US Waivers

French oil major Total plans to make a final investment decision on a $2 billion gas project in Iran by the summer, but the decision hinges on the renewal of US sanctions waivers, the company's chief executive said on Thursday.

Total was the first western energy company to sign a major deal with Tehran since the lifting of international sanctions last year. Its project aims to develop South Pars Phase 11, which is part of the world's largest gas field, Reuters reported.

Chief Executive Patrick Pouyanne said the Phase 11 project will be among a couple of projects to be approved by the company to start by the summer, if nothing is modified with regards to the sanctions.

"There are two executive orders that are supposed to be renewed before summer," he said, explaining that the administration of former US president Barack Obama had signed waivers suspending the sanctions.

"These are supposed to last about 18 months. So President Trump will have to, or not, renew these sanction waivers," Pouyanne told journalists in Paris.

Trump has said the Iran nuclear deal, which ended a diplomatic standoff between Iran and six world powers over the country's nuclear policy and opens the way for western investment, was "the worst deal ever negotiated."

US Secretary of State Rex Tillerson, a former CEO of Total's rival Exxon Mobil, has called for a full review of the Iran nuclear agreement.

Pouyanne said that based on the nuclear deal that was signed, the US government would have to prove that Iran had breached the agreement, for the new Trump-led administration to decide against renewing the waivers.

"So, either the waivers are renewed and as such, Iran's nuclear deal will be respected, which will allow us to execute the contract and we'll do so, or they (the US) decide to tear up the Iran nuclear agreement," Pouyanne said. "In that case, we'll not be able to work in Iran."

He added that there was uncertainty on what the new White House administration would do.

Pouyanne said the decision to go ahead with the gas deal last November was a 'win-win' one, and that Total had some guarantees in place that protects the company financially if the project does not go through.

Total signed an agreement last year, worth $4.8 billion, to develop South Pars Phase 11 at the head of a consortium that consists of China National Petroleum Corporation and Iran's Petropars. 

Total was previously active in phases 2 and 3 of South Pars, but it ceased operations in Iran in 2010 following disagreements over contract terms as well as pressure from the French and US governments over oil and trade sanctions against Tehran.