Expanded U.S. sanctions on Iran and businesses active there have prompted four of Europe’s five biggest oil companies to stop investing in the Persian Gulf state, the State Department said yesterday.
“There is a real recognition that the U.S. is very serious, and many companies are trying to cut their losses,” Suzanne Maloney, a former State Department official who is now a senior fellow at the Brookings Institution in Washington, said in an interview. The sanctions exceed “anything Iran has faced even in the darkest moments of history.”
President Barack Obama in July signed a law broadening the scope of sanctions against Iran, giving the U.S. the power to punish foreign suppliers of gasoline to Iran, the Organization of Petroleum Exporting Countries’ second-biggest producer. Under those measures, companies may commit to winding down their business and are allowed to continue work on legally binding existing contracts.
U.S. Deputy Secretary of State James Steinberg said the pledge from the European energy companies means they are “eligible” to avoid U.S. sanctions aimed at pressuring Iran to enter negotiations over its nuclear ambitions.
Inpex Corp., Japan’s biggest energy explorer, is considering withdrawing from the Azadegan oil project in Iran, Trade Minister Akihiro Ohata said in Tokyo today. The company isn’t a target of U.S. sanctions on Iran and Japan’s government won’t interfere in the decision, he said.
Iran is subject to international sanctions for its nuclear program, which the U.S. and the United Nations’ International Atomic Energy Agency have said is cover for the development of atomic weapons. Iran has said it needs the technology to advance efforts to generate electricity and for other civilian purposes such as medical research.
Shell, based in The Hague, and Madrid-based Repsol YPF SA have abandoned negotiations to help expand natural gas output from Iran’s South Pars field, the State Department said in a fact sheet distributed yesterday.
Shell, Total, BP Plc, OAO Lukoil, Glencore International AG, Vitol SA and Trafigura AG are among the companies that have halted sales of refined fuels such as gasoline and jet fuel to the Islamic nation, according to the fact sheet.
“At the heart of the statute is the commitment not to engage in any new business,” State Department spokesman Philip J. Crowley said yesterday.
The U.S. also announced that it is imposing sanctions on the Iranian energy-trading company Naftiran Intertrade Co., also known as Nico. The Lausanne, Switzerland-based company is involved in the trading of oil and refined products and seeks to invest in energy projects, according to its website.
“The nature of the effect we are trying to produce is not to take down the Iranian economy or harm ordinary Iranians,” Steinberg said. “What we are looking at is direct impact on the kind of people who can make significant investments in their energy sector.”
A spokeswoman for Rome-based Eni declined to comment on the U.S. announcement. Eni Chief Executive Officer Paolo Scaroni said in February that the company would reduce its presence in the Islamic republic, although it wouldn’t pull out of existing projects.
“Our position has been firm since 2008, when we declared we would not make any new investments in Iran,” said Baard Glad Pedersen, a spokesman for Statoil, which is based in Oslo. The company has a few technical advisers on the South Pars gas project in the country for a limited period under existing contracts, he said.
Total spokeswoman Phenelope Semavoine declined to comment. Calls to Shell’s press office weren’t answered.
Seifollah Jashnsaz, Nico’s managing director, headed the National Iranian Oil Co. prior to this post. Petropars, Petroiran and Iranian Oil Company U.K. Ltd. are subsidiaries of Nico. National Iranian Oil Co. allocated more than 13 projects to Nico for financing in 2009, according to the company’s website.
Calls made to the mobile phone of Iranian foreign ministry spokesman Ramin Mehmanparast and to Nico after working hours yesterday weren’t answered.
An advocate for sanctions against Iran said the Obama administration should take tougher action.
“I support sanctions against Iranian-government controlled entities operating in Europe,” Mark Dubowitz, executive director of the Foundation for Defense of Democracies in Washington, wrote in an e-mail. “I am disappointed in the Obama administration’s decision to sanction only one company, while ignoring the many foreign energy firms that are violating U.S. laws.”
To contact the editor responsible for this story: Mark Silva at firstname.lastname@example.org