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20 Aug, 2018 10:30

US sanctions scare Total out of Iran despite Brussels ‘protection’ pledge

US sanctions scare Total out of Iran despite Brussels ‘protection’ pledge

French energy major Total is leaving Iran, the country’s oil minister announced on Monday. The firm pulled out of a major gas development deal despite promises by the EU to protect European companies from US sanctions.

“Total has officially left the agreement for the development of phase 11 of South Pars (gas field). It has been more than two months that it announced that it would leave the contract,” Iran Oil Minister Bijan Namdar Zanganeh said, as quoted by the government-run ICANA news agency.

Total’s departure was triggered by Washington’s unilateral reinstatement of sanctions against Tehran, which also targets any foreign firms doing business with the Islamic Republic.

In May, the EU officials pledged to protect the European companies doing business in Iran by enforcing the so-called Blocking Statute – a law of one jurisdiction that is designed to hinder application of a ruling made by a foreign jurisdiction. Brussels said that despite US sanctions, European firms would continue working in Iran under the protection of the EU.

“As the European Commission we have the duty to protect European companies. We now need to act, and this is why we are launching the process to activate the ‘blocking statute’ from 1996,” EU Commission President Jean-Claude Juncker said prior to his July meeting with President Trump.

The announcement by Brussels failed to assure major European firms, for whom the prospect of losing the US market is much scarier than losing contracts in Iran. Apart from Total, shipping giant Maersk announced it would no longer transport Iranian energy products. Vehicle manufacturers Peugeot said it would leave the Islamic Republic, while Daimler halted expanding its business in the country.

The US unilaterally withdrew from the nuclear deal the country signed in 2015 with Iran, Russia, China and the European Union. As part of the agreement Iran vowed to limit its nuclear enrichment program and, in return, decades-long economic sanctions against Tehran were to be lifted.

Russia, China, the European Union and a number of other countries have condemned Washington’s withdrawal from the nuclear deal and have vowed to continue working in Iran despite US sanctions. They said they would recognize only an internationally agreed mandate by the United Nations, not unilateral action against a particular country by the United States.

The renewed US penalties, targeting the automobile sector along with gold and other metals trading, came into force on August 7. The second round of sanctions imposed by Washington is set to come into effect on November 4. The broader measures will target Iranian oil and shipping sectors, as well as transactions tied to energy trading and the country’s central bank.

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