France's Total sees Iran as too risky

Total's announcement came as Iran reportedly test-fired more long-range missiles in a second round of exercises meant to show the country can defend itself against any attack by the U.S. or Israel.

Total and two other Western oil firms have refused to slam the door on future cooperation in Iran, however, saying that despite their pullback from liquefied natural gas projects there the country remains an important potential future partner.

"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."

U.S. State Department spokesman Sean McCormack told reporters that Total's decision was evidence that recent action by Iran "really does serve to isolate it from the rest of the world, and it really calls into question, in the minds of governments and businesses around the world, the advisability of doing business in Iran."

He said it also spoke to the growing effectiveness of international sanctions against Iran. Part of Total's reasoning, McCormack suggested, is that "it has become much, much more expensive to do business with Iran."

Total and Malaysia's Petronas have been in discussions for developing a liquid natural gas project linked to Iran's South Pars gas field, in the Persian Gulf.

Total and other oil companies have been under 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 which Tehran insists is meant to produce nuclear energy.

The project is Total's only significant development in Iran, and its suspension is likely to set back Iran's ambitions to develop its liquid natural gas industry by eight to 10 years, said Samuel Ciszuk, a Middle East energy analyst at research firm Global Insight.

"This is a very hard blow" to Iran's plan, especially given the decision in May by Royal Dutch Shell PLC and Repsol YPF SA to pull out of their own South Pars LNG development, Ciszuk said.