China's CNPC takes over Total's share in Iran gas project

The French energy giant had said it would pull out of the project if unable to secure a US sanctions waiver. CNPC will own an 80 percent stake in the multibillion dollar gas project, the Iranian state news agency said.

A man walks by the headquarters of the China National Petroleum Corporation in Beijing on March 25, 2015.

China's state-owned energy company CNPC has taken over Total's share in Iran's South Pars gas project, the Iranian state news agency IRNA reported on Saturday.

The news, if confirmed, would mean that the French company failed to secure a waiver from US sanctions, which were re-imposed on the Islamic republic earlier this month.

Total had said it would pull out of the project unless it secured a waiver. But it did not say what it would do with its stake should it pull out. Total has until November 4 to wind down its Iranian operations.

Total was not immediately available for comment.

Biggest natural gas reserves

Total and CNPC are part of an international consortium that signed a deal with Iran's state oil firm National Iranian Oil Company (NIOC) in 2017 to develop Phase II of the South Pars field, which has the world's biggest natural gas reserves ever found in one place.

Total made an initial investment of $1 billion (€875 million) for its 50.1 percent stake. It was the first Western energy investment in the Islamic republic after sanctions were lifted in 2016. CNPC bought 30 percent of the project.

"China National Petroleum Corp (CNPC) has replaced Total of France with an 80.1 percent stake in Phase II of the South Pars (gas field)," IRNA quoted Mohammad Mostafavi, director of investment at NIOC, as saying.

US President Donald Trump has renewed the sanctions lifted under a 2015 nuclear deal between Tehran and global powers. Trump plans to slap heavier sanctions in November targeting the country's oil sector.

ap/jm (Reuters)

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US sanctions against Iran are back in effect

Sanctions signed off

US President Trump signed an executive order on August 5 aimed at piling financial pressure on Tehran to force a "comprehensive and lasting solution" to Iranian threats, including its development of missiles and regional "malign" activities. Trump warned that those who don't wind down their economic ties to Iran "risk severe consequences."
US sanctions against Iran are back in effect

Where's the money?

The first phase, which took effect on August 7, targets the Islamic Republic's access to US banknotes, making transactions in a US-dollar dominated financial world difficult. A ban on Iran purchasing precious metals including gold further serves as an attempt to cut the country off from global markets.
US sanctions against Iran are back in effect

Planes, cars and carpets

Phase one also hits key industries including the purchase of commercial planes, cars and carpets. Iranian imports of graphite, aluminum, steel, coal, gold and some software are also affected. German automaker Daimler called off the production and sale of Mercedes-Benz trucks in Iran indefinitely after the sanctions came into force.
US sanctions against Iran are back in effect

Fuel to the fire

A second phase of sanctions — which is due to take effect on November 5 and will block Iran's oil sales — is due to cause more damage. Several countries, however, including China, India and Turkey have indicated they are not willing to entirely cut their Iranian energy purchases.
US sanctions against Iran are back in effect

'Psychological warfare'

Iranian President Hassan Rouhani said that the United States had launched "psychological warfare" against Iran to create division amongst its people. But he insisted that Iran still can rely on its allies China and Russia to keep its oil and banking sectors afloat. He has also demanded compensation for decades of American "intervention" in the Islamic Republic.
US sanctions against Iran are back in effect

EU protection

European Union foreign policy chief Federica Mogherini said the bloc is encouraging small and medium enterprises to increase their business with Iran. She said Tehran has been compliant with their nuclear-related commitments. The EU issued a "blocking statute" to protect European businesses from the impact of the sanctions.

Author: Keith Walker