Total SA Chief Executive Officer Patrick Pouyanne confirmed that the French multinational oil company is concerned about possible consequences on its operations if the US follows through with plans to reimpose sanctions on Iran where the company is involved in a major natural gas development project. “As soon as the US decides to reimpose sanctions, Total will lose access to US banks, which is vital. We could lose US shareholders and it could affect our US assets,” he said on May 17.
But Pouyanne also expressed a determination not to let immediate problems keep Total from pursuing its long-term strategy of moving into businesses that effectively address climate change and other problems while keeping global energy reliable and affordable. “The goal is to make Total one of the world’s major energy companies. Addressing climate change by helping create a low-carbon future is an important part of this,” he said during remarks at the Center for Strategic and International Studies.
A day earlier, Total announced that it would seek a waiver from any US secondary sanctions directed at companies doing business in Iran, where it is involved in the South Pars 11 project with PetroChina and others. President Donald Trump’s May 8 announcement that the US will reimpose sanctions after withdrawing from the 2015 Joint Comprehensive Plan of Action to ensure that Iran’s nuclear program is exclusively peaceful means Total will need to unwind all of its SP 11 operations by Nov. 8 unless it receives a waiver, the company said.
“Total has always been clear that it cannot afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by US banks for its worldwide operations (US banks are involved in more than 90% of Total’s financing operations), the loss of its US shareholders (US shareholders represent more than 30% of Total’s shareholding), or the inability to continue its US operations (US assets represent more than $10 billion of capital employed),” it indicated.
“I’m not a politician or diplomat. I can see this having major effects on our operations,” Pouyanne said. “We’re not naive. We see the global regional dynamic where we’re involved. We’ll do what we need to protect our investment, but we also have a contract with Iran that we need to consider…. We will do our job and engage with the French government and US authorities when necessary. At the end, however, my duty is to protect my company and its shareholders’ interests.”
‘A big test’
Pouyanne said the situation with Iran “is a big test for US-European relations, but we are a company that needs to watch out for its own and its shareholders’ interests. I also think the US and its European allies need to ask whether they want to give the region to Russia and China.”
Asked if Total would remain in Venezuela if President Nicolas Maduro’s government moves ahead with an election that many observers outside the country consider dubious, Pouyanne said the company stayed in Myanmar for decades while there were serious problems there.
“There are problems now in Venezuela,” he acknowledged. “I think it’s important to stand with the people who live in such areas. Twenty years ago, Venezuela was a beautiful country. Now, we’re observing a collapse of its economy. A company like ours needs to stay as long as it can in these situations because people will remember if we do—even the politicians.”
Total’s recognition of global climate change as a problem which needs to be solved has made it consider where new markets will be, Pouyanne said. “Oil and gas companies are part of the problem. They should be part of the solution. We try to have a corporate roadmap that will let us do this,” he said. “We need to understand all forms of energy. We are an old industry that is youthful and competent. We should be ready to use new ways to communicate.”
Contact Nick Snow at [email protected].