Iran warns BP it 'will not forget' oil firm's refusal to do business

The following editorial is compiled by Daily Star staff - Lebanon - Tuesday, January 25, 2005:

Iran warned on Monday it would not forget a decision by British oil giant BP to pull out of the Islamic Republic because of U.S. sanctions against companies investing in the country's vital energy industry.

"We do not consider this to be a friendly attitude and we will not forget it. This is a gesture by BP in favor of the United States and this company has ruined its long-term interests in Iran," Oil Minister Bijan Namdar Zanghaneh told reporters.

BP's chief executive John Browne was quoted as saying last week that it was "impractical" for his company to do business in Iran due to its massive operations in the United States.

"To do business with Iran at the moment would be offensive to the United States, and therefore against BP's interests,'' Browne said at the London headquarters. "We're very heavily influenced by our American position.''

BP, with origins in the Anglo-Iranian Oil Company formed in 1909, was forced out of Iran in the 1970s during a phase of rampant nationalization of oil industries in the Middle East.

BP has spent almost $100 billion on acquisitions, including Amoco Corp. and Atlantic Richfield Co., and currently gets almost half of its revenue from the U.S. Most of the company's growth is centered on Russia, the second largest oil exporter in the world.

The U.S. Iran-Libya Sanctions Act of 1996 imposes mandatory and discretionary sanctions on non-U.S. companies investing more than $20 million annually in Iranian oil and gas. In late July 2001, the U.S. Congress voted to renew the sanctions for five more years.

But Zanganeh played down the importance of BP's decision.

"Basically BP has not had any oil projects in Iran during its 10-year presence here, except for some small research activities. We never counted on BP," he said.

Brown said he has not been in any talks with Iran since the terror attacks of Sept. 11, 2001, which "changed everything."

BP is allegedly unhappy with Iran's investment policies, so-called "buybacks," where foreign companies operate a project in Iran to cover development and running costs, and earn a profit before handing the project over to the state.

"You can't plan for the long term in this area,'' Brown said. "When we were talking to Iran some time ago, we were trying to explore other ways.''

This "exploration" is focusing on Iraq. "We want to help Iraq build its oil and gas business, if the circumstances are right,'' Browne said. "We want to participate in it. Step one is to do the study for Iraq.''

Browne conceded however that due to the hazardous security situation in Iraq BP would only be carrying out studies over the next year at the Rumaila oil field.

"For a company like BP it is not the right moment to physically go into Iraq, the real issue if the security of our personnel,'" Browne said. "People joined BP to do oil and gas, not to be a soldier.'" - Agencies

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