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Conoco risks US wrath by aiding Iran's oil industry

Financial Times
September 14, 2000

TEHRAN -- Conoco, the US oil company, has collaborated with Iran on work to develop one of the world's largest oil fields, despite the risk of being accused of breaching US sanctions against Iran.

Senior Iranian officials told the Financial Times that Conoco helped analyse data collected last year by the National Iranian Oil Company (NIOC) during its exploration of the Azadegan field, on the understanding that Conoco would be given priority in developing the new field once the US sanctions are lifted.

Ali Hashemi, who was deputy oil minister at the time and is now chairman of the parliamentary oil committee, said Conoco had "provided the technology to further appraise the volume of oil reserves". He said that he was not aware of any money changing hands and could not judge whether Conoco was breaking US sanctions.

"Naturally any company that helps in exploration has priority (in competing for the contract)," Mr Hashemi added.

In a statement Conoco said: "We have seen seismic data from the field and provided our opinion to NIOC. We do not believe it is in violation of the sanctions. We looked at the data and provided our opinion on what it showed."

President Bill Clinton issued an executive order in 1995 prohibiting US involvement in developing Iran's oil industry.

He said the "activities and policies of the government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy and economy of the US". His order was in direct response to a Dollars 600m (Pounds 427m) agreement between Conoco and NIOC to develop Iran's Sirri oil field. The deal was blocked and the Iranian government handed it to Total of France instead.

Within less than two months, Mr Clinton issued a second order effectively banning all US trade with Iran, including the export of technology and technical data.

NIOC and Iran's oil ministry declined to comment on Conoco's involvement.

One oil executive in Tehran described the Azadegan field in southwestern Iran as "the jewel in the crown". Analysts estimate oil reserves in place of 20bn to 25bn barrels.

Conoco, as well as the other leading US oil companies, Chevron and Exxon Mobil, maintain regular contact with NIOC and lobby against the US sanctions.

"It's no secret that we've maintained a dialogue with NIOC since 1995 in the hope that US sanctions would be lifted at some point and we would be allowed to do business," said Carlton Adams, Conoco spokesman.

Archie Dunham, Conoco's chief executive, visits Iran regularly to maintain his relationships with leaders there. He recently won approval from the US government to travel to Libya to assess large holdings Conoco had to relinquish after US sanctions were imposed in 1986.

US oil companies argue the sanctions unfairly open the field to their European, Canadian and Asian competitors, which have signed oil and gas deals with Iran worth about Dollars 8bn in the past three years.

The deals have gone ahead despite the Iran-Libya Sanctions Act (ILSA) passed by Congress in 1996 which threatens sanctions against non-US companies that invest in Iran's energy sector.

The act, however, allows the president to issue waivers, which he did following pressure from Europe. ILSA expires in August 2001, but neither the Democrats nor the Republicans have signalled they would move to lift the executive orders.

Over the past 18 months, reflecting a slow thaw in relations, the US has eased some restrictions.


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