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Iran says its oil market open to US, calls for end to embargo

TEHRAN, March 7 (AFP) - Iran stepped up the pressure to end the US embargo with the surprise announcement Sunday that US oil companies face "no obstacle" to doing business in the Iranian oil industry.

"There is no obstacle to US oil companies participating in oil development projects in Iran," Foreign Minister Kamal Kharazi said, clearly referring to Washington's unilateral trade embargo which prohibits US companies from doing business here.

He underscored the point by stressing that the embargo served only to hamper US business interests.

"The Americans must come to terms with reality and see that there is no solution other than changing their sanctions policy," Kharazi said at a press conference.

"This policy serves only to hurt American companies."

Kharazi's surprise announcement comes just days after a top US oil executive told the US Congress that the embargo meant US firms could not compete on equal terms with companies from Europe and elsewhere.

"The Iran-Libya Sanctions Act (ILSA) is proving to be a counterproductive foreign policy tool for defending American interests in the region," Michael Stinson, senior vice president of oil giant Conoco, told the Senate International Relations Committee.

"I believe the Congress should recognize that ILSA has created more problems than it solved and repeal the sanctions on Iran," he said.

"I find it almost tragic that the French are building relations in Iran in ways we cannot," he said.

French oil firm Elf Aquitaine and Italy's ENI signed a 540 million dollar deal earlier this month to develop Iran's Doroud oil field in a direct challenge to the ILSA, known as the D'Amato law after its chief congressional sponsor, then Senator Alfonse D'Amato.

Kharazi said those firms -- along with France's Total, which signed a two billion dollar deal with Iran in 1997 -- "have played a key role in breaking the D'Amato law."

Washington passed the law in 1996, one year after imposing a unilateral economic embargo against Tehran.

The bill calls for harsh sanctions against any foreign firm investing more than 20 million dollars in the oil sectors of Iran or Libya, states Washington accuses of supporting international terrorism.

The US State Department said last week it was looking at slapping sanctions on Elf and ENI over the most recent deal.

"We will assess the implications," said State Department spokesman James Foley. "We'll take appropriate action."

"The US remains strongly opposed to investment in Iran's petroleum sector," he said. "We have repeatedly urged the governments of France and Italy at the most senior levels to discourage this investment."

French energy group Total, in partnership with Russia's Gazprom and Petronas of Malaysia, was the first to flout the law with its 1997 agreement to develop Iran's giant South Pars field in the Persian Gulf.

In the face of intense international pressure, Washington finally granted the Total project an exemption because it concluded that the sanctions would not prevent the project from going forward.

In exchange, Washington won pledges from European governments that they would step up efforts to prevent Iran from acquiring weapons of mass destruction, according to US officials.

But some European officials have interpreted that move as a de facto scaling back of the D'Amato law and concluded that Washington lacked the will or the means to enforce it.

The second largest oil producer in OPEC behind Saudi Arabia, Iran depends on oil for more than 80 percent of its hard currency revenues and has been hard hit by the worldwide slump in crude prices.

Last month it announced that a deal worth 200 million dollars had been agreed in principle with the Canadian firm Bow Valley and Britain's Premier Oil to develop the offshore Balal site.

The State Department said it had not received official word the deal had been agreed but vowed to review the matter thoroughly.


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