New US sanctions threaten international projects in Iran’s energy sphere

Tabnak – US President Donald Trump’s decision to withdraw from the nuclear deal with Iran has already started to threaten Iran’s international agreements in the energy sphere. While Total has been given two months to decide about the future of its activities in Iran, Lukoil declared that it puts the current projects in Iran on hold.

In this vein, a Lukoil official has been quoted as saying that Russia’s second oil producer has put its plans to develop projects in Iran on hold in the face of US sanctions.

“Considering the latest developments, I guess, it’s too early to say what our plans about Iran will be. For the moment, basically, we have everything on hold,” the unnamed official told a conference call Monday, according to Reuters.

Russian companies have signed a record number of oil and gas contracts with Iran since the lifting of sanctions on the Islamic Republic in early 2016 and Lukoil has proposed to develop Mansouri and Abteymour oil fields in Ahvaz.

Zarubezhneft and Gazprom Neft are the other Russian companies which have submitted plans to the National Iranian Oil Company (NIOC) to develop oil fields in Iran.

In 2011, Lukoil pulled out of a joint project with Norway’s Statoil, which led to the discovery of oil in Iran’s Azar and Changuleh fields, after the US and Europeans intensified sanctions on the Islamic Republic.

Meanwhile, Iran’ Minister of Petroleum Bijan Zangeneh has said that Total has 60 days to get exemptions from US sanctions in order to proceed with a $2 billion project to develop Iran's giant South Pars gas field.

The French oil major has said that it is unable to carry on with the project unless it is granted a specific waiver by US authorities that would protect it against sanctions.

“Total has 60 days to negotiate with the US government. In the course of these 60 days, the French government can negotiate with the US government for Total to stay in Iran,” Zangeneh told the Iranian parliament’s energy commission late Tuesday. “Otherwise, China National Petroleum Corporation (CNPC) will replace Total in this project,” he added.

Total signed a gas agreement in late 2016 to operate phase 11 of the giant South Pars project, becoming the first major European company to deal with Iran following the lifting of sanctions.

The French company holds a 50.1% stake in the project, with CNPC owning 30%, and Iran's Petropars 19.9%. The project will have a production capacity of 2 billion cubic feet per day, or 400,000 barrels of oil equivalent per day including condensate, starting in 2021.

US President Donald Trump’s announcement on May 8 to abandon the 2015 nuclear deal with Iran and reimpose sanctions on the country has sparked a flight of foreign companies.