DAR AL HARB - U.S.A.: U.S.A. WARNS ENERGY COMPANIES ABOUT DOING BUSINESS WITH IRAN

U.S. tightens financial squeeze on Iran
But sanctions aimed at energy projects could anger Europe
by Steven R. Weisman

WASHINGTON: For all of the U.S. efforts to apply economic and political pressure on Iran over its nuclear program, Washington has never used a potentially potent tool in its arsenal — penalties on foreign companies that assist Iran in producing oil and natural gas.

That may be about to change. The United States has quietly been warning energy companies, including Royal Dutch Shell, Repsol and SKS, as well as the governments of China, India, Pakistan and Malaysia, that sanctions are possible if they pursue energy deals with Iran.

As a result, several huge projects planned for Iran could be vulnerable, including one possible $10 billion project planned by Shell and Repsol, the Spanish oil company, and another $20 billion venture by SKS, the Malaysian oil company, to produce natural gas in Iran's Golshan and Ferdows fields.

In recent months, the administration has tried to avoid a diplomatic or political flap from its jawboning. But the potential for sanctions is posing a dilemma for the administration by setting up a possible new fight with Europe if it proceeds with them, or a fight with Congress if it does not.

One factor behind the warnings, administration officials acknowledge, is that Congress, out of concern about Iran's suspected nuclear arms program and support for terrorism, appears to be moving quickly toward passing a law that would make sanctions mandatory.

"What we're trying to do is create multiple points of pressure on Iran in both the private and public sector," said R. Nicholas Burns, U.S. under secretary of state for political affairs. "These companies also need to know that the attitude of Congress on their activities in Iran is hardening."

Last month, the U.S. ambassador to Spain, Eduardo Aguirre Jr., met with Repsol executives in Madrid to advise them against going forward with a deal to develop Iran's South Pars field, which contains one of the world's biggest natural gas deposits. The ambassador was told that the deal was not yet final, according to American and Repsol officials.

"No investment is being made at present," said a Repsol spokesman in Madrid, asking not to be identified by name. "There will not be a decision on this until next year."

The messages to oil companies mark the latest episode in a long campaign of pressure that reached a turning point in December, when the administration won approval of a United Nations Security Council resolution designating 10 Iranian companies and a dozen individuals as off limits for international financial dealings.

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