Oil firms stop investing in Iran

Under threat of US sanctions, European oil firms Total, Shell, Statoil and Eni have pledged to stop investing in Iran in what amounts to a “significant setback” to Tehran, a US official said Thursday.

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The pledges fall in line with new energy and financial measures against Iran that US President Barack Obama signed into law in July in the wake of UN Security Council sanctions imposed in June to curb Iran’s nuclear ambitions.

“We have received commitments from four international energy firms to terminate their investments and avoid any new activity in Iran’s energy sector,” Deputy Secretary of State James Steinberg told reporters.

The move dealt “a significant setback to Iran,” Steinberg added as analysts agreed that most major Western firms have now come to the conclusion that it is no longer worth doing business in Iran.

Steinberg said that the firms — France’s Total, Anglo-Dutch Shell, Norway’s Statoil and Italy’s Eni — are now eligible to avoid sanctions for doing business in the United States or with US firms.

The companies “have provided assurance to us that they have stopped,” or taken steps to stop business with Iran, he said.

“However, some international oil companies have not yet committed to any new activities in Iran’s petroleum sector. And for this reason the State Department is launching investigations into those companies,” he said.

He would not identify these firms or say how many there are.

Two senators urged Secretary of State Hillary Clinton on Tuesday to ensure that the administration punish Chinese and Turkish firms reportedly providing Iran with refined petroleum products.

“Iran is using revenues from its energy sector to fund its nuclear program,” Steinberg charged.

Steinberg also said the State Department decided to impose sanctions on Naftiran Intertrade Company (NICO), a Swiss-based subsidiary of Iran’s national oil company, for its involvement in Iran’s energy sector.

State Department official Douglas Engel admitted that US firms were already prohibited from most dealings with the firm, but said the move “does send a message” to companies in other countries not to work with NICO.

Steinberg put the moves by the four firms in the context of the growing global effort to tighten the screws on Iran as the European Union and countries like Canada, Australia, Japan and South Korea impose separate sanctions.

The West fears Iran’s uranium enrichment program masks a drive to build a nuclear bomb, while Iran insists it is solely for peaceful purposes.

With both Iran and the United States signaling last week they are open to returning to negotiations, administration officials suspect Iran is willing to consider talks now that sanctions are beginning to bite.

Analyst Karim Sadjadpour told AFP the sanctions are taking their toll on the Islamic republic.

“Most major Western companies have reached the conclusion that the headaches of doing business in Iran outweigh the benefits,” said Sadjadpour of the Carnegie Endowment for International Peace.

“When you consider the sanctions, the reputational risk, the uncertain political climate, and the unfriendly business environment, there are far more attractive places in the world for western companies to invest their money,” he said.

Joseph Cirincione, president of the Ploughshares Fund, which seeks to check the spread of nuclear weapons, said the administration’s strategy to force Iran back to negotiations appears to be working.

“These particular companies are very big and will have a significant impact on Iran, particularly because Iran has a chronic investment problem in their energy sector,” Cirincione told AFP.

“All the indicators I see are telling me that Iran is going to come back to the negotiating table, that they are feeling the bite of these sanctions,” Cirincione added.

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