Iran's oil minister has given French energy giant Total sixty days to get a sanctions waiver from Washington or its major stake in a multi-billion-dollar gas project will be given to a Chinese oil firm.
"Total has 60 days to negotiate with the U.S. government," said Bijan Zanganeh, according to the oil ministry's Shana news agency. He added that the French government was also free to lobby the U.S. government on Total's behalf during those 60 days.
Total was the only Western firm to finalize an investment deal in Iran's energy sector after sanctions were lifted under the 2015 nuclear agreement in January 2016 in exchange for curbs on Iran's nuclear activities.
Total signed an agreement in July to become the lead partner in a $4.8 billion project to develop the South Pars 11 gas field, along with the China National Petroleum Corporation and Iran's Petropars.
The Total deal was repeatedly hailed by Tehran for demonstrating the success of the 2015 nuclear agreement at spurring investment in Iran's flagging economy.
But after Washington announced earlier this month that it was withdrawing from the nuclear deal and preparing to reinstate U.S. sanctions against Iran by November 4, Total said it would abandon the gas project unless it received an exemption from the U.S. sanctions.
Total's CEO Patrick Pouyanne said last week that it was "quite unlikely" that the company would obtain an exemption, though it is negotiating with the U.S. Treasury.
Zanganeh said that if the French firm fails to win a waiver, its Chinese partner CNPC "will replace Total in this project."
That move would give the Chinese oil giant an 80 percent interest in the gas project, up from 30 percent today.
Even before Washington pulled out of the nuclear deal, Iran had struggled to attract investment into its energy sector, despite having some of the world's largest known reserves of oil and natural gas.
The only other announced project was a $742 million deal with Russian state-owned firm Zarubezhneft to boost production at two oil fields in the western province of Ilam.
Hard-liners in Iran have opposed foreign investment in the energy sector despite the government saying that billions of dollars in outside investment is needed for Iran's large but aging oil fields to fully realize their potential.
"Iran failed to attract much energy investment, even when conditions were at their most favorable," wrote the U.S. Center on Global Energy Policy in a recent briefing note.
"The country was far too slow in unveiling its new Iran Petroleum Contract, and when it did, potential investors complained that the terms were unattractive."