Total CEO Pouyanné: Transatlantic Partners Risk Gifting Iran to 'China and Russia'
Speaking on Thursday at the Center for Strategic and International Studies, a Washington D.C. think tank, Total CEO Patrick Pouyanné faced several questions about his company’s recently announced decision to wind down operations in Iran following the reapplication of secondary sanctions by the Trump administration.
With his trademark candor, Pouyanné left no doubt that Total was obligated to comply with U.S. sanctions in regards to the USD 5 billion South Pars gas project launched in July 2017, stating “Secondary sanctions mean that the U.S. president can decide that Total cannot have access to any U.S. banks. I cannot run a company in 130 countries without access to U.S. banks.”
For Total, the South Pars project in Iran was only considered “because of the JCPOA, which meant the end of secondary sanctions.” With the nuclear deal in doubt, and sanctions set to return, “there is no possibility for us,” Pouyanné declared, further noting the role of American shareholders and the significant portfolio of American assets of the French oil company.
But the imposing, formerly rugby-playing executive, did not shut the door to Iran completely. Reiterating a point made in the company’s press release regarding South Pars, Pouyanné stated, “The only way we can proceed is with a project waiver from the U.S.”
Acknowledging a contractual obligation to the Iranians to seek all possible means to remain in the project, Pouyanné confirmed that Total was engaging “with the French government and the U.S. authorities” to raise the prospect of such a waiver, which will not be “easy to obtain.”
Looking to the wider political context, Pouyanné pointed to the early measures being taken by European governments, which may have a bearing on the effort to secure a waiver, reminding the audience that “in 1996-1997 when we made the first South Pars project, [Total] had such a waiver. It was the result of a diplomatic discussion between Europe and the U.S."
The prospects of a diplomatic discussion are dim and Pouyanné recognized that the disagreement over Iran policy is “a big test for the U.S.-Europe relationship" and one that is “beyond Total, as a commercial operation."
Nonetheless, Pouyanné issued a warning: “What would be not good neither for the U.S., nor for Europe, is if that at the end only Russia and China can do business in Iran.” Earlier on Thursday, Iranian authorities had announced that Total’s joint-venture partner in South Pars, Chinese state oil company CNPC, would be assuming Total’s share of the project. Pouyanné was also likely alluding to the presence of Russia state oil company Zarubezhneft, which has signed two major oil deals in Iran. He warned the “Atlantic allies” to consider whether they “want to give all the Middle East region to China and Russia, as this is what we are doing step after step.”
The geopolitical implication of blocking companies such as Total from working in Iran may form the basis of the companies lobbying to receive a waiver from the Trump administration.
Reflecting on what the pullout from the Iranian market meant, Pouyanné struck a philosophical tone, highlighting the importance of loyalty in the oil industry. Responding to a question about Total’s perseverance in Venezuela in an increasingly hostile environment, Pouyanné pointed to the case of Iran, noting “You have to stay as long as you can, because people remember... They remember the company when it stands together in difficult times.”
In the oil industry, he explained “leaving a country is a very tough decision, because it takes a lot of time to convince people that we can come back. It is a question of loyalty.”
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