Iran General NewsU.S. notes growing foreign role in Iran's energy sector

U.S. notes growing foreign role in Iran’s energy sector


ImageWall Street Journal: Forty-one foreign companies had some form of commercial activity in Iran's energy sector over the past five years, despite American laws that could prompt U.S. sanctions against such firms, according to U.S. government auditors. The Wall Street Journal


ImageWASHINGTON—Forty-one foreign companies had some form of commercial activity in Iran's energy sector over the past five years, despite American laws that could prompt U.S. sanctions against such firms, according to U.S. government auditors.

The report, to be released Thursday by the Government Accountability Office, found that some of the companies are headquartered in some of the U.S.'s closest allies, including Japan and South Korea. A similar GAO study conducted three years ago found half as many companies involved in Iran's energy sector.

The latest report found that 23 of the companies were involved in developing Iran's natural-gas industry while another 14 had deals in the crude-oil sector. Other companies were involved in pipelines and petrochemicals.

Among those the GAO listed are China's national oil and petroleum companies; OAO Gazprom of Russia; Petróleo Brasileiro SA of Brazil; and Royal Dutch Shell Group of the Netherlands.

The report, however, is based on publicly announced deals in Iran's oil, gas and petrochemical industries, and not on actual investments.

Government auditors said they made no attempt to independently investigate the deals.

Absent any actual investment on the ground, many of the companies are unlikely to have run afoul of U.S. law, specifically the 1996 Iran-Libya Sanctions Act, which allows for sanctions against any foreign company that invests more than $20 million in Iran's energy sector.

The report said it made no determination as to whether violations of the act had taken place.

In addition, some of the companies listed—including oil groups ENI SpA of Italy, OAO Lukoil Holdings of Russia, and Total SA of France—have already announced they will no longer do business with Iran.

Still, the report is likely to add fuel to arguments made by congressional critics that the U.S. isn't doing enough to punish companies doing business with Tehran.

It also comes as members of Congress are debating legislation that would impose unilateral sanctions against Iran, including restricting sales of refined petroleum products to the country.

In response to Congressional inquiries, State Department officials have said some publicly reported investment in Iran's petroleum could run afoul of the Iran-Libya Sanctions Act.

In a March 16 letter to Sen. Jon Kyl (R., Ariz.), a leading critic of the Obama administration's Iran policy, Richard Verma, the State Department's head of legislative affairs, said the administration has yet to reach any conclusions in those cases.

Mr. Verma also noted that many deals, particularly those reported by Iranian media, never actually materialize.

But Mr. Verma also wrote that his department has new concerns about China, which has become Iran's largest market for oil, adding that the administration was monitoring the activity for violation of U.S. law.

"There is increased activity in Iran's energy sector by Chinese companies that raises concerns," Mr. Verma wrote. "We are monitoring these cases very closely and addressing this in bilateral discussions with the Chinese on a regular basis."

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