French energy company Total plans to continue developing a huge Iranian gasfield despite mounting concerns that Donald Trump may pave the way for the US to reimpose sanctions on Tehran by tearing up the Iran nuclear deal.
Patrick Pouyanné, chief executive, said he was aware it would be a “bumpy” road when he signed a multibillion-dollar deal in July to develop South Pars, in what was the first big energy contract in more than a decade between Iran and a European company.
“We knew when we signed that it will not be an easy road,” Mr Pouyanné said. “But I prefer to have a problem to solve and to have the opportunity rather than having not signed [and] no opportunities.”
Speaking in Washington, he said he was “committed to put the concrete agreement in place” to develop part of the South Pars gasfield, which is the world’s largest and is shared by Iran and Qatar.
His comments come as Mr Trump weighs whether to recertify on October 15 that Iran is complying with the nuclear deal. If the US president does not recertify, Congress has 60 days to decide whether to reimpose sanctions.
Mr Pouyanné said Total was also interested in investing in the second phase of an Arctic liquid natural gas project on Russia’s Yamal Peninsula being led by Novatek, the Russian gas producer. Total and Chinese energy company CNPC each have a 20 per cent stake in the $27bn first phase, while China’s Silk Road Fund has 9.9 per cent.
“I am willing to be in Arctic 2 obviously,” he said. “It is a matter of cost. It is a matter of projects. If the project is fitting with our investment criteria, yes we are willing to be investors in Arctic 2.”
His interest in Arctic 2 signals a level of comfort with the impact of western sanctions on Russia that almost derailed Arctic 1. Plunged into uncertainty by restrictions on finance, Total and Novatek were forced to switch capital expenditure costs from dollars to euros and to turn to Chinese investors to replace western ones.
“The impact was that we cannot use dollars, so we have been obliged to put in place a gigantic project financing, $19bn, with Chinese banks,” he said about Arctic 1. “Thanks to the US sanctions we discovered the world of Chinese finance. It is possible . . . and it is legal. We have to deal with all these regimes.”
Javad Zarif, Iran’s foreign minister, last week told the Financial Times he thought Mr Trump would not recertify the deal. But Mr Pouyanné said he had no idea what would happen. “I don’t know what Donald Trump will decide, and I don’t know what the Congress will decide so, step by step.”
Mr Pouyanné said Total had not come under any pressure from the US over its Iran business, and added that he had not spoken to any US senators about the debate on the nuclear deal. “I don’t receive any order from the French government. I don’t receive any order from the US government . . . I respect the fact that each country can have its own foreign policy and of course . . . we take that into account.”
Mr Pouyanné expressed concern about the possibility that Mr Trump might impose tariffs on imported solar panels following a recent ruling from the US International Trade Commission that domestic manufacturers had been badly harmed by foreign competitors exporting cheap panels.
Total has a majority stake in SunPower, a US solar company that opposes the imposition of tariffs or other punitive measures on solar panel imports. The ITC case was brought by Suniva, a US-based producer that is majority-owned by a Chinese company. “It’s a very strange story . . . starting from Suniva,” said Mr Pouyanné. “I don’t know if President Trump knows that Suniva was held by Chinese interests.”
Mr Pouyanné said he recently raised the issue with Wilbur Ross, US commerce secretary, but declined to say if he had found a receptive ear for his argument that tariffs would reduce overall employment in the growing renewable energy industry.
“You have plenty of people who are working to install all these panels,” said Mr Pouyanné. “There are more people working there than there were in manufacturing plants . . . If priority is jobs in the US, then the administration should seriously think what are the consequence of such tariffs.”
Additional reporting by Henry Foy
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