RISKS AND CONTROL
Risk Factors
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A) Restrictions against Cuba
Refer to point 3.1.9.2 below for information concerning Section 13(r)
of the Securities Exchange Act of 1934, as amended, pertaining to
activities of the Group related to Iran.
U.S. sanctions against Cuba prohibit any person subject to the
jurisdiction of the United States(1) from engaging, directly or indirectly,
in any activities or dealings related to Cuba, without government
authorization. Therefore, the use of the U.S. dollar is prohibited for
almost all transactions related to Cuba. Furthermore, it is prohibited
to export and reexport to Cuba all goods subject to the Export
C) Restrictions against Russia
Since July 2014, various Sanctions Regimes have been adopted
against Russia, including prohibitions to deal with certain Russian
individuals and entities or restrictions on financings, as well as
restrictions on investments and exports to Russia.
(2)
Administration Regulations without a license and with exceptions
for example, certain medical equipment), as well as to import all
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goods of Cuban origin into the United States. Cuba is not subject to
European economic sanctions.
The economic sanctions adopted by the EU since 2014 do not
materially affect TOTAL’s activities in Russia. TOTAL has been formally
authorized by the French government, which is the competent
authority for granting authorization under the EU sanctions regime,
to continue all its activities in Russia on the Kharyaga and
Termokarstovoye fields and the Yamal LNG and the Arctic 2 LNG
projects.
TOTAL has had an interest in a liquefied petroleum gas (LPG) cylinder
filing plant in Cuba since 1997 and continues the development of its
activities regarding lubricants, fluids and greases in Cuba.
B) Restrictions against Iran
Several countries and international organizations, including the United
States and the EU, maintain Sanctions Regimes of varying degrees
targeting Iran.
The United States adopted various economic sanctions, some of
which target PAO Novatek( (“Novatek”), and the entities in which
Novatek (individually or with other similarly targeted persons or
6)
3
(7)
entities) owns an interest of at least 50%, including OAO Yamal LNG
On July 14, 2015, the EU, China, France, Russia, the United
Kingdom, the United States and Germany reached an agreement
with Iran, known as the Joint Comprehensive Plan of Action (the
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“Yamal LNG”),Terneftegas( and OOO Arctic 2 LNG . These
8) (9)
sanctions prohibit, in particular, U.S. persons from all transactions in,
providing financing for, and other dealings in debt issued by these
entities after July 16, 2014 of longer than 90 days maturity (reduced
to 60 days as from the end of November 2017). The use of the U.S.
dollar is therefore prohibited for these types of financings, including
Yamal LNG. The Yamal LNG project’s financing was finalized in
successive steps in 2016 in compliance with applicable regulations.
The financing of the Arctic LNG 2 project is under discussion.
“JCPOA”), regarding limits on Iran’s nuclear activities and relief under
certain U.S., EU and UN economic sanctions regarding Iran.
On January 16, 2016, the International Atomic Energy Agency
(
“IAEA”) confirmed that Iran had met its initial nuclear compliance
commitments under the JCPOA. Therefore, as from that date, UN
economic sanctions, most U.S. secondary sanctions (i.e., those
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3)
covering non-U.S. persons
and for activities outside U.S.
jurisdiction) and most EU economic sanctions were suspended(
4)
.
In addition, the U.S. Department of Commerce has imposed
restrictions on exports and reexports of certain goods to Russia
under the regulation related to the U.S. export control with respect to
certain oil projects, which do not materially impact TOTAL’s current
activities in Russia.
Following the withdrawal of the United States from the JCPOA in
May 2018, U.S. secondary sanctions concerning the oil industry
were re-imposed as of November 5, 2018.
In July 2017, TOTAL signed a contract for a period of 20 years with
the National Iranian Oil Company (“NIOC”) relating to the development
In August 2017, the United States adopted the Countering America’s
Adversaries Through Sanctions Act (“CAATSA”). This law provides
for, in particular, the possibility to impose secondary sanctions against
a non-U.S. person who (i) invests in certain types of crude oil projects;
(5)
and production of phase 11 (SP11) of the giant South Pars gas
field. Following the withdrawal of the United States from the JCPOA,
TOTAL withdrew from this project and finalized its withdrawal on
October 29, 2018, prior to the re-imposition of U.S. secondary
sanctions on the oil industry as of November 5, 2018. TOTAL ceased
all operational activity in Iran before November 4, 2018.
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ii) carries out a significant transaction with a sanctioned Russian
individual or entity; (iii) carries out a significant transaction with an
individual/entity party to or acting on behalf of Russian economic
intelligence or defense sectors; (iv) carries out a direct and significant
investment (beyond certain amounts), which contributes to the
development of Russian export pipelines or (v) sells, leases or
provides goods, services, technologies or information that could
directly and in a significant manner facilitate the maintenance or
expansion of the construction, modernization or repair of energy
export pipelines by Russia. This law also, on the one hand, reduced
the maturity periods of debts restricting the financing of certain entities
and, on the other hand, extended, as from January 29, 2018, the
prohibition applicable to certain entities to export goods and services
outside of Russia in support of exploration or production projects of
oil in deep water, beyond the Arctic offshore, or concerning shale
formations (shale oil).
Furthermore, certain U.S. states have adopted regulations with
respect to Iran requiring, in certain conditions, state pension funds
and other state-owned institutional investors to divest securities in
any company that has or had business operations in Iran and state
public contracts not to be awarded to such companies. Certain U.S.
state regulators have adopted similar initiatives relating to investments
by insurance companies. TOTAL believes the impact of these
regulations to be limited due to the Group’s decision to withdraw
from Iran. Nevertheless, TOTAL continues to closely monitor these
measures, which are generally still in effect following the withdrawal
of the United States from the JCPOA.
With respect to the Group’s activities conducted under the sanctions
framework that was in place prior to the entry into force of the
JCPOA, the U.S. Department of State made a determination on
September 30, 2010 that certain historical activities would not be
deemed sanctionable and that, so long as TOTAL acted in
accordance with its commitments related to this determination, it
would not be regarded as a company of concern for its past
Iran-related activities. TOTAL’s historical activities in Iran have been
conducted in compliance with these Sanctions Regimes. Since 2011,
TOTAL has had no production in Iran.
On April 6, 2018, the American Department of Treasury’s Office of
Foreign Assets Control (OFAC) for the first time designated and
registered certain Russian oligarchs and political figures, as well as
several entities owned by them, on the list of Specially Designated
Nationals and Blocked Persons List. Non-U.S. persons may now be
sanctioned under secondary sanctions for having carried out
significant transactions with the designated persons.
TOTAL continues its activities in Russia in compliance with applicable
sanctions regimes.
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(
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1) Cuban Assets Control Regulations (CACR), 31 CFR Part. 515.
2) Export Administration Regulations (EAR) § 734.3.
3) ”U.S. person” means any U.S. citizen and permanent resident alien wherever he/she is in the world, entity organized under the laws of the United States or any jurisdiction within the
United States, including foreign branches, or any person or entity located in the United States.
(
4) Certain U.S. and EU human rights-related and terrorism-related sanctions remain in force.
(5) TOTAL was an operator of the SP11 project and held 50.1% alongside the national Chinese company China National Petroleum Corporation (“CNPC”) (30%) and Petropars (19.9%), a
1
00% owned subsidiary of NIOC.
(
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6) A Russian company listed on the Moscow and London stock exchanges and in which the Group held an interest of 19.4% as of December 31, 2018.
7) A company jointly owned by PAO Novatek, Total E&P Yamal (20.02%), China National Oil and Gas Exploration Development Corporation – CNODC, a subsidiary of CNPC and Silk Road
Fund.
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8) A company jointly owned by PAO Novatek and Total Termokarstovoye BV (49%).
(9) A company wholly-owned owned by PAO Novatek as of December 31, 2018.
Registration Document 2018 TOTAL
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