Big European Oil Firms to End Iran Operations

Four of Europe’s five biggest oil firms have said that they would wind down their energy investments in Iran.

The U.S. is now trying to convince China to bar its companies from stepping into the vacuum created by the departing European firms, something the Chinese have shown a willingness to do elsewhere, particularly Sudan.

Royal Dutch Shell, headquartered both in the U.K. and the Netherlands; Total of France; Italy’s Eni ; and the Norway’s partially state-owned Statoil have committed to no further investments in Iran.

Unfortunately, these firms have major operations in Iran already, so their pledges to enter into “no further investments” is not what it may seem. Ongoing operations can last for years and in the past firms have used extensions to existing contracts to keep operations in targeted rogue nations going for years…

The State Department says that European and Kuwaiti firms along with Russia’s Lukoil, India’s Reliance and Turkey’s Turpras have stopped or promised to stop selling gasoline and other refined products to Iran. British Petroleum and Shell said they are no longer supplying jet fuel to Iran Air. And Lloyd’s of London announced it would not insure or reinsure petroleum shipments going into Iran. Iran only refines about 40% of its domestic petroleum needs. The remainder of its refined petroleum needs must be imported. Venezuela’s Hugo Chavez has committed to helping Iran obtain refined petroleum.

Iran is China’s third-biggest supplier of oil, after Angola and Saudi Arabia. Chinese state-owned oil companies have signed memorandums committing to invest more than $100 billion in Iran’s energy sector over the past few years.

Chinese companies have a history of moving in on projects that Western and Japanese firms have left dangling. In June 2009, China National Petroleum signed a $5 billion contract with National Iranian Oil to develop the massive South Pars gas field, after the Iranians accused French oil producer Total of delaying the project. And last year China National Petroleum reportedly agreed to invest around $2 billion to develop the South Azadegan fields in place of Inpex, which had cut its share.

https://www.washingtonpost.com/wp-dyn/content/article/2010/09/30/AR2010093007055.html