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EU and BP: US sanctions on Iran should not be concerned Shah Deniz II project

23 January 2012 08:56 (UTC +04:00)

Officials from the British Foreign Office, the EU and BP say they asked Capitol Hill lawmakers in December to ensure that new sanctions don’t block the project, known as Shah Deniz II, because Iranian state-owned oil company Naftiran Intertrade Co. holds a 10% stake.

Naftiran is a Swiss-based subsidiary of state-owned National Iranian Oil Co. A Naftiran official declined to comment.

BP is operating the project. BP and Norway’s Statoil ASA each hold a 25.5% stake, while the State Oil Co. of Azerbaijan, France’s Total SA and Russia’s Lukoil Holdings hold 10% stakes and Turkish Petroleum owns the remaining 9%.

The Shah Deniz II project could have been hit by a bill by Rep. Ileana Ros-Lehtinen (R., Fla.) that would ban any company doing business with Iran’s oil and gas sector from operating in the U.S. But the current version of the legislation includes language that says it won’t affect efforts "to bring gas from Azerbaijan to Europe and Turkey," or to achieve "energy security and independence from Russia."

EU and U.K. officials say they are closely monitoring other congressional proposals that could hit Shah Deniz II in 2012, a U.S. election year in which targeting Iran could score political points.

Shah Deniz II is intended to become the main supplier for a proposed pipeline to bring Central Asian natural gas to Europe, as the EU seeks alternatives to its dependence on Russia.

The EU and the U.S. are adopting new measures to isolate Iran and starve it of oil revenue, including a proposed European oil embargo and U.S. sanctions on Iran’s central bank, which manages oil revenue.

The U.K. supports a policy that "balances the desire to put pressure on Iran over its nuclear program and makes sure it does not have an adverse impact on European economies," said a British Foreign Office spokesman, who confirmed the lobbying on behalf of BP.

The spokesman said it wasn’t a contradiction to want an exemption for Shah Deniz II and seek stringent sanctions at the same time.

A BP spokesman said recent discussions on Shah Deniz II were part of the U.K.-based company’s "routine engagement" with U.S. lawmakers. The company is in full compliance with applicable sanctions, including EU regulations and U.S. law, the spokesman said.

The EU, while agreeing in principle to a ban on Iranian oil, is still debating how much time to give refiners to switch to other oil suppliers. Some countries fear higher prices could result from the embargo, putting additional pressure on their economies.