AFP: The United States said Monday it would try to discourage a major Austrian oil company from following through on a proposed deal to help develop an Iranian gas field, noting the venture could draw US sanctions. WASHINGTON, April 23, 2007 (AFP) – The United States said Monday it would try to discourage a major Austrian oil company from following through on a proposed deal to help develop an Iranian gas field, noting the venture could draw US sanctions.
Austria’s OMV, the biggest oil and gas group in Central Europe, announced Saturday that it had signed a memorandum of understanding with Iran to jointly develop parts of the South Pars gas field, one of the largest in the world.
It will also set up a liquefaction facility for the Iran Liquefied Natural Gas project and conclude further supply agreements for LNG from Iran.
State Department spokesman Sean McCormack said US officials would try to dissuade the Austrians from going ahead with the deal at a time when the international community is locked in a dispute with Iran over its suspected nuclear weapons program.
“We’re going to talk to the Austrian government, talk to the firm involved and raise with them the idea that perhaps this not the most appropriate time to be making or committing to making large investments in the Iranian oil and gas sector,” he told reporters.
The UN Security Council has slapped two sets of sanctions on Iran over its refusal to suspend a uranium enrichment program many fear is aimed at providing material to build nuclear weapons. Iran insists the program is only to make fuel for nuclear power generation.
The UN sanctions target only Iran’s nuclear and ballistic missile programs and not its oil or gas sectors.
But a 1996 US law, the Iran Libya Sanctions Act, prohibits foreign firms that invest more than 10 million dollars in Iran’s energy sector from raising capital in US financial markets.
McCormack said it would be premature to consider whether the OMV-Iran deal could draw US sanctions since the agreement Saturday was only preliminary and there had been no “actual commitment to transfer funds or to start moving resources into Iran.”
But he added: “Of course, the question always arises when you get over a certain amount of investment in the Iranian oil and gas sector, one has to take a look at the Iran Sanctions Act.”
At the same time the United States discourages firms from reaching even preliminary investment agreements with Iran, McCormack said.
“We question whether or not this is the right time to be handing the Iranians those kind of — at the very least, public relations — victories,” he said.