Paris — Total has said it will not risk investing in Iran following the return of US sanctions, unless it can secure a waiver.

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 said in a statement on Wednesday. So the French energy giant won’t commit any more funds to Iran’s South Pars 11 project, in which it took a controlling stake last year.

The comments from Total — the first Western oil company to sign binding agreements to develop Iran’s oil and gas fields following the end of a previous round of sanctions in 2015 — illustrate the challenge posed by renewed US restrictions. While the French company was speaking about a natural gas project, its reluctance to continue operating there could equally apply to others that rushed back into sectors from automobiles to aviation and engineering to the oil trade.

“The risks of being on the wrong side of the US government are not worth the benefits of trading with Iran once the sanctions are in place,” said Jason Gammel, a London-based analyst at Jefferies. “Oil companies are not going to be able to invest in the upstream sector, traders and purchasers of Iranian crude are going to have to find other sources, or seek an exemption from the US government to be able to continue buying.”

180 days

US President Donald Trump said last week that he intends to pull out of an international accord curbing Iran’s nuclear programme. The US treasury has given companies up to 180 days to end dealings with Iran. The EU, also a signatory to the atomic deal, has pledged to take steps to salvage the accord.

Total said it “is engaging with the French and US authorities to examine the possibility of a project waiver”.

US banks are involved in more than 90% of Total’s financing operations, American shareholders represent upward of 30% of its investors and the company has more than $10bn of capital employed in the country, it said.

“The issue is that Iranian transactions can’t be processed though any part of the banking system that needs access to the dollar,” Gammel said. “There will be niche players who will benefit far more from trading with Iran than risk from the US system, but it’s going to be a very small set of players that are not going to be particularly well capitalised.”

Losing stake

Pulling out of the South Pars project could result in Total losing its stake to China National Petroleum, National Iranian Oil MD Ali Kardor said this month. The French company said it has spent less than €40m on the project so far.

Withdrawing from the South Pars 11 project will also not affect Total’s target to raise the company’s production by 5% a year between 2016 and 2022, according to the statement. It had planned to spend the equivalent of $1bn on the first part of the development, and had projected an output of 370,000 barrels of oil equivalent a day from the Iran fields, making it the largest on its list of a dozen projects to be given the green light in the two years to 2018.

Total also bought about 56-million barrels of Iranian crude for nearly €2.6bn last year, primarily for its own refineries, according to its annual report. In addition, about 14-million barrels of oil products were purchased from, or sold to, entities with ties to the Iranian government, generating €1.1bn of revenue, and a net loss of €5.7m, according to Total.

The company didn’t say if these trades will be affected.