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France's Total Backs Off Iran Gas Project

By AP
Thursday, 10 Jul 2008 | 7:25 AM ET

French energy giant Total SA said Thursday it is too risky to invest in Iran for now, raising questions about the future of western involvement in developing Iranian gas reserves.

"The conditions are not present for investing in Iran today," said Total spokeswoman Lisa Wiler. "We hope that the political relations will improve so that we can invest."

Total had been in discussions for developing a liquefied natural gas project linked to Iran's South Pars gas field with Malaysia's Petronas.

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But Total and oil majors have been under increasing political pressure from the United States and its allies over their activities in Iran amid mounting tensions over Iran's nuclear program, which the U.S. and other countries fear is aimed at building weapons but Tehran insists is for producing nuclear energy. (Total may "appease" the market, according to one trader. See the video)

The standoff heightened Wednesday when Iran test-fired long- and medium-range missiles during war games to show it could retaliate against any U.S. or Israeli attack.

The French foreign minister last year urged Total and national gas giant Gaz de France to refrain from investing in Iran.

"Today we would be taking too much political risk to invest in Iran because people will say, 'Total will do anything for money,"' Chief Executive Christophe de Margerie was quoted by the Financial Times as saying Thursday.

Neither the company spokeswoman nor the CEO would say whether Total was pulling out of South Pars or overall investment in Iran.

"Iran remains a priority country in the strategy of Total," Wiler said. "We are still in contact" with Iranian partners, she said.

De Margerie expressed frustration at U.S. pressure on European energy investors in the countries.

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