UPDATE 2-Total to end Iran fuel sale if US passes sanctions

Mon Apr 26, 2010 3:47pm BST

Quotes

   

* Total to stop gasoline sales to Iran if US sanctions start

* Total supplies small amounts of fuel to Tehran now

* Political situation in Iraq no impact on project there

* Total eyes JV with Kuwait in China, oil deals in Kuwait

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By Simon Webb

KUWAIT, April 26 (Reuters) - French energy giant Total (TOTF.PA) will cease gasoline sales to Iran if the United States passes legislation to penalise fuel suppliers to the Islamic Republic, Total's chief executive said on Monday.

With the U.S. pushing for a fourth round of U.N. sanctions on Iran over its nuclear work, several of the world's top oil firms and trading houses have already curbed fuel sales to pre-empt potential penalisation of their U.S. operations. [ID:nLDE63A011]

Total continued to deliver small amounts of fuel to the Islamic republic, Christophe de Margerie told reporters on the sidelines of an industry conference.

"If any laws, or any rules are made in a way that prevents (us) from doing those things we will stop," he said. "We always respect laws."

Total has faced political pressure to stop the sales, but would only do so when officially required, de Margerie said, although he declined to say who had applied the pressure.

"I've been asked by certain people to reconsider, I say OK, make it official," he said.

The U.S. and its allies suspect Iran wants to develop nuclear weapons, while Tehran says it needs nuclear energy to meet power demand.

Under bills that have passed the U.S. Senate and House of Representatives, but which must still be combined into one, companies worldwide which supply gasoline to Iran would be largely prevented from doing business with the world's top energy consumer the United States. [ID:nN22197803].

Due to a chronic lack of refining capacity, the world's fifth-largest crude exporter has to import at least 30 percent of its gasoline needs -- making it vulnerable to any future sanctions that could interrupt that vital inflow.

TOTAL IRAQ INVESTMENT

The political situation in Iraq had no impact on the pace of work at the Halfaya oilfield project, de Margerie said.

"We are working in the spirit of what has been decided by the existing government and by the rules of the bids," de Margerie said. "When there will be a new government we will see."

China National Petroleum Company (CNPC) is the majority partner in the oilfield project and Total owns an 18.75 percent stake in the field. The consortium aimed to move ahead apace with the project, he said.

"Our partners are willing to go quickly and we are encouraging them to do so," he said.

Iraq, which has the world's third largest oil proven reserves, signed a final contract earlier this year to develop Halfaya with CNPC, Total and Malaysian state firm Petronas PETR.UL.

Halfaya, in southern Iraq, has estimated reserves of 4.1 billion barrels of oil.

The field could help turn Iraq into one of the world's top oil producers and earn Iraq billions of dollars it needs to rebuild after decades of war, sanctions and economic decline.

KUWAIT

Total was also in talks with Kuwait over developing a joint-venture refinery and petrochemical plant in China, de Margerie said.

Several potential schemes were under discussion although Total would only go ahead with one, he said, declining to give more details.

Kuwait is looking for an international oil firm to join it and Sinopec in a joint venture to build a 300,000 barrels per day refinery and petrochemical plant in Zhanjiang. The plant will involve investment of around $9 billion.

Total was also in talks with Kuwait about technical service agreements for work on heavy oil projects and in enhanced oil recovery, de Margerie said.

Total executives held talks with Kuwait on Sunday and de Margerie's presence in the Gulf Arab country was a signal of the company's intent, he said.

"We have been, shall we say, sleeping a little bit here," he said. "There are a lot of things to be done in heavy oil, in enhancing oil recovery factors in existing fields."

Disputes between Kuwait's government and parliament have slowed the country's efforts to develop the energy sector, but in February it signed a 5-year technical service agreement with Royal Dutch Shell (RDSa.L) to develop gas fields in the country's north.

(Reporting by Simon Webb; editing by Michael Hogan)