French energy giant Total has yet to permanently pull out of Iran following the renewal of U.S. sanctions, but CEO Patrick Pouyanne on Wednesday sounded a pessimistic note about his company’s prospects in the country.
Total positioned itself to develop a portion of the world’s largest natural gas field after the 2015 Iran nuclear deal lifted punishing sanctions on the Iranian economy. However, the company is now preparing to abandon the Persian Gulf project unless the U.S. government issues the company a sanctions waiver.
That would protect Total from so-called secondary sanctions, which the United States can use to punish foreign companies that engage in prohibited activity with Iran. Washington gave firms 90 to 180 days to wind down their business in the country after President Donald Trumpwithdrew the United States from the nuclear deal last month.
“There’s not a single international company like Total who can work in any country with secondary sanctions. I don’t have the right. It’s just the reality of the world,” Pouyanne told CNBC at an OPEC seminar in Vienna.
Pouyanne acknowledged that his position probably does not sit well with Europe’s leaders. The European Union has attempted to salvage the nuclear deal by passing measures aimed at protecting the bloc’s firms that have business dealings in Iran.
But Pouyanne told CNBC he must be pragmatic and face reality.
“The reality is that the capital of the world today is in the hands of the U.S.,” he said. “Is it right that in this world the U.S. [is] using that … to impose some rules for other countries? That’s a debate.”
Secondary sanctions are particularly perilous for multinationals like Total. Engaging in sanctioned activity with Iran could prompt the American government to cut Total off from the massive U.S. financial system and force the firm to wind down its operations in the States.
“The U.S. could decide that I could not have access to any U.S. financing,” Pouyanne said. “It’s impossible, let me be clear, to run an international company like Total without having access to U.S. financing or to U.S. shareholding.”
Total says U.S. banks are involved in about 90 percent of the company’s financing operations, while American investors account for more than 30 percent of its shareholding. The company has more than $10 billion deployed in U.S. operations.
By comparison, Total spent less than 40 million euros, or roughly $46 million, on its project developing the massive South Pars natural gas field in Iranian waters.
