Energy Giants Bail on Iran, Focus Reports

Release Date: 2010-10-04

Facing mounting pressure from the American government, four of the world’s largest energy companies, namely Total, Shell, Statoil and Eni, today announced their vow to halt new activities and investments in Iran’s energy industry.

The move came after the US government imposed further economic sanctions on Iran last June, just weeks after the United Nations Security Council had voted to do the same in an attempt to curtail Iran’s nuclear activities. The four European behemoths were all liable to be penalized by the terms of the latest round of sanctions. The most restrictive measure by the US government is to prohibit energy companies operating in Iran to tap into American financial institutions to raise capital.

The Iranian economy is already strained under past sanctions imposed by the international community but it has managed to sustain itself mostly on revenues from its energy sector. Iran is currently a large oil exporter and depends on its energy sector for more than 60% of its annual budget, nevertheless, it is forced to purchase gasoline from abroad due to its lack of refining capacity.

While the decision by European companies to freeze their activities in the country is a major success for American lawmakers, there are still large energy operators that have so far ignored the call to isolate Iran. Among them are Chinese and Turkish companies that are backed by their own governments in condemning western efforts to pressure Iran out of its nuclear ambitions.

Following suit to the decision by the four European operators, the Japanese state-sponsored energy company, Inpex, also announced today that they would hand over their share of the Azadegan oilfield in Iran.

This kind of momentum from the private sector is unprecedented and could put finally force the Iranian government to concede on its nuclear ambitions. The amounting hardship on its economy and people might just be the catalyst for a cooperative Iran that will one day integrate itself into the global energy industry as a major player.

Type:	NORMAL
Company:	Focus Reports
Country:	Switzerland