Iran General NewsEU partners fail to back France on Iran investment

EU partners fail to back France on Iran investment

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Reuters: European nations have failed to echo France’s call to its oil and gas companies not to bid for projects in Iran amid mounting concerns the Islamic republic is pressing ahead with the search for a nuclear weapon. By Tom Bergin

LONDON, Sept 21 (Reuters) – European nations have failed to echo France’s call to its oil and gas companies not to bid for projects in Iran amid mounting concerns the Islamic republic is pressing ahead with the search for a nuclear weapon.

Nonetheless, industry sources say talks on deals for European oil majors to invest billions of dollars in Iran have already slowed due to the rising tension between Tehran and western nations.

Tehran says its nuclear programme is for electricity generation only but earlier this week, French Foreign Minister Bernard Kouchner said his country must prepare for the possibility of war against Iran over the programme.

Kouchner said Paris had asked oil giant Total and gas firm Gaz de France not to bid for projects in Iran to signal France was serious and added he thought the companies had heard his advice.

Kouchner hinted other countries had taken similar actions. However, no government contacted by Reuters said it had urged its oil and gas companies to cool dealings with Iran.

Anglo-Dutch oil major Royal Dutch Shell Plc is considering one of the biggest proposed investments in Iran — a multi-billion dollar project to produce natural gas and a plant to liquefy the gas for export in pressurised ships.

However, a spokeswoman for the UK government said it had not asked Shell or others to desist from pursuing Iranian business, although she added: “We do explain the risks of doing business in Iran.”

The Dutch minister of foreign affairs, Maxime Verhagen, spoke on Monday with his French counterpart, Kouchner, about their concerns on Iran’s nuclear programme.

But while a government spokesman said The Hague is not promoting trade with Iran, he did not confirm any request to Shell to halt talks with Iran on the project.

Sources familiar with the matter said no such request has been made yet.

Vienna said it still supported Austria’s OMV AG in its Iran investments which include proposals to develop oil discoveries in the west of the country. A government spokesman said it would only change its position if and when the U.N. or EU change their sanctions regime.

The government in Rome declined to say if it had asked Milan-based oil major Eni SpA to restrict its Iranian operations, while the Spanish government was unavailable for comment on Madrid-based Repsol’s plans for a major gas project.

U.S. PRESSURE

U.S. legislation has long banned U.S. companies from investing in Iran and in recent years Washington has increased pressure on non-U.S. companies to dissuade them from investing in Iran.

Under U.S. law, Washington could levy penalties on non-U.S. firms for doing business with Iraq but in the past support from the European Union and their governments has helped the European oil majors to chase deals in Iran without suffering U.S. retribution.

However, the ratcheting up of U.S. pressure and Europe’s growing impatience with Iran are now discouraging companies from moving forward with negotiations.

“We’ve pulled back,” said one senior executive with a western oil company in talks on proposed investments in Iran.

Other countries seem less eager to discourage trade with Iran. Brazilian state-controlled oil company Petrobras said it continued exploration activities in Iran and knows of no political pressure to quit or not pursue projects in Iran.

Some in the Chinese oil industry even see the possibility of EU sanctions against Iran — which France has suggested could be pursued if the UN failed to agree new sanctions — as an opportunity.

“When it’s a hard time for Iran politically, it’s a good time for the Chinese to get in there. It will be too late if we wait until the problems settle down,” one executive at a Chinese oil firm who asked not to be named said.

Repsol, Shell and ENI declined to say if they had been asked not to bid for Iranian business. OMV said it would stick to European and international laws on Iran trade and that Vienna had not conveyed any new stance yet.

(Additional reporting by Gilbert Kreijger in Amsterdam, Aizhu Chen in Beijing, Chikafumi Hodo in Tokyo, Andrei Khalip in Rio and Boris Groendahl in Vienna)

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