The French oil giant Total said in a statement that work on its 40-million-euro (47-million-dollar) gas project in Iran will be scrapped unless the company is exempt from the US' looming anti-Iranian sanctions.
U.S. President Donald Trump said last week he intends to pull out of an global accord curbing Iran's nuclear program.
Determined to keep the accord alive, European leaders need to find a way to assure companies that their investments are beyond Washington's extra-territorial reach.
On May 8 President Donald Trump announced his decision to withdraw the USA from the Iran nuclear deal, also pledging to reinstate the anti-Iranian sanctions that were lifted as a result of the agreement.
Total signed a contract in 2017 to develop phase 11 of Iran's South Pars field with an initial investment of $1 billion, marking the first major Western energy investment in the country after sanctions were lifted in 2016.
German insurer Allianz and Danish tanker operator Maersk are also winding down their business in Iran. Joe Kaesar, the CEO of Germany's Siemens, told CNN his company would not be able to do any new business with Tehran.
Iran has said it may start enriching uranium again if it can no longer see any economic benefit to the deal.More news: Lars von Trier's new film prompts mass walkout at Cannes
Continuing to do business in Iran would be too great a risk as the company has large operations in the US and depends on the country's banks for financing its operations, Total (tot) said in a statement Wednesday.
United States banks are involved in more than 90% of Total?s financing operations, Total said, adding that USA assets represent more than $10 billion of capital employed and that 30% of its shareholders are in the US. France, Germany and Britain are leading a European effort to safeguard Europe's economic interests but have few options that pose any threat to the United States.
When the Iran agreement was signed and sanctions were ended, Total was among the first corporations to sign business agreements with the Iranian government.
"The issue is that Iranian transactions can't be processed though any part of the banking system that needs access to the US dollar", Gammel said. "With that in mind it's a logical decision", a European diplomat said of Total's decision.
The U.S. sanctions essentially force most global companies to give up doing business in Iran if they want to continue operating in the United States.
Total said it would not be making any further commitments towards the Iranian South Pars project for now, and added it was engaged with French and U.S. authorities over the possibility of a waiver to the project.
In announcing his withdrawal from the deal, Trump warned companies that they face sanctions if they do business with Iran.