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Energy firms to quit Iran to comply with US sanctions

2010-10-01 10:08:29

Four major energy companies are pulling out of Iran in order to comply with US

sanctions, the state department says.

Royal Dutch Shell, Total, Statoil and Italy ENI will now avoid US penalties

targeting companies which do business with Iran.

Naftiran Intertrade Co, based in Switzerland, will face new sanctions .

The US has tightened sanctions on Iran over concerns about its nuclear

ambitions, which Washington fears are aimed at acquiring atomic weapons.

Tehran insists its nuclear programme is for purely peaceful purposes.

'Conduit for cash'

Recent legislation gives the US administration the power to penalise foreign

companies which invest more than $20m ($12.7m) in Iran's energy sector.

However, companies taking steps to comply with the law are exempted from

penalties.

"People are increasingly reaching the conclusion that it's simply not worth it

to engage in activities with Iran," Deputy US Secretary of State James

Steinberg was quoted as saying by Reuters news agency.

Other energy companies are under investigation for possibly breaching

sanctions, but the state department has declined to name them.

Mr Steinberg described Naftiran - a subsidiary of the National Iranian Oil

Company - as a key conduit for cash into the Iranian oil industry.

In practice, US companies are already prohibited from doing most forms of

business with Naftiran. But US officials say the extra sanctions will dissuade

non-US companies from doing business with it.

This latest announcement comes a day after the US froze the US assets of eight

senior Iranian officials accused of serious human rights abuses following the

disputed presidential election in June 2009. They will also barred from

travelling to the US and from doing business with companies there.

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Posted: 2010750@246.80

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stranger

European oil firms resist U.S. pressure to quit Iran

By Wojciech Moskwa Wojciech Moskwa Fri Oct 1, 1:28 pm ET

OSLO (Reuters) European oil majors resisted pressure from the United States

on Friday to stop doing business with Iran, in spite of Washington's drive to

isolate Tehran over a nuclear program the West suspects is aimed at making

bombs.

Total said it was still buying Iranian crude as it was not illegal under new

U.N. sanctions, Statoil said it was providing Iran with technical assistance

and ENI said it would exit Iran only when existing deals expire.

The United States had said on Thursday that all three, as well as Royal Dutch

Shell, would abandon their Iranian activities voluntarily to avoid U.S.

sanctions which can target foreign firms that do business with the Islamic

state.

U.S. Deputy Secretary of State James Steinberg said on Thursday the companies

"have provided assurances to us" that they have stopped or are in process of

stopping activity in Iran and would not undertake new deals that may be

sanctionable.

Iran sits on the world's second largest natural gas reserves after Russia and

one of its largest proven reserves of oil, but Western energy companies have

halted or scaled down their operations in the country due to the escalating

nuclear dispute.

Tougher sanctions on Iran in recent months have raised the stakes for

international oil firms while "also increasing the sense that the worsening of

Iran's operational environment is irreversible", the IHS Global Insight

consultancy said.

The former head of the U.N. nuclear watchdog's inspections worldwide said Iran

was making "slow but steady" progress on its nuclear program and he believed

there was still time to find a diplomatic solution to the standoff.

"They are making progress, but I think there is still time for a negotiated

solution," Olli Heinonen, who quit in August and now teaches at Harvard

University, told Reuters.

NUCLEAR CURB

Major powers hope new U.N., U.S. and European sanctions, imposed on Iran since

June, will persuade it to enter serious negotiations on curbing its nuclear

development.

Iran has repeatedly ruled out stopping nuclear enrichment and dismissed the

impact of punitive measures, while leaving the door open for talks which may

resume soon.

In a move partly intended to make it less vulnerable to sanctions, Iran plans

to cut hefty food and fuel subsidies and a government official said in Tehran

on Friday that gasoline prices will rise sharply in the coming weeks.

President Mahmoud Ahmadinejad wants to phase out $100 billion of subsidies, a

policy economists say is a necessary but politically risky step.

In Tokyo, Trade Minister Akihiro Ohata said Japan's top oil explorer Inpex Corp

may pull out of an oilfield project in Iran, a move that would see it join

other global energy firms shunning the country.

A Total spokeswoman said the latest European sanctions "will keep to a minimum

our activities" in Iran. But she said Total had not cut back its activities in

the country since it said earlier this year it would halt the sale of refined

products.

Statoil said it would conclude work in Iran by 2012 at the latest but was still

providing technical assistance after finishing development of three phases of

the South Pars natural gas project last year.

"Already in 2008 we said that we would not make further investments in Iran,"

spokesman Baard Glad Pedersen said.

Shell said it was complying with all legislation while declining to comment on

its trading activities. Traders say it is still involved in Iranian crude

purchases. "As you know, it is not illegal to lift oil from Iran," a Shell

spokesman said.

(Additional reporting by Lionel Laurent in Paris and by Robin Pomeroy in

Tehran; Writing and additional reporting by Fredrik Dahl in Vienna; Editing by

Louise Ireland)