Iran: BP to Washington: Time's Up. It seems unwilling to wait any longer for a deal with Iran
Business Week, June 11
Stanley Reed in Tehran
Abstract:
It is one of the great prizes of the oil industry: the vast oil and natural
gas wealth of Iran. John Browne wants a piece of the action. Browne's company,
BP, is sending clear signals that it wants a deal soon with Tehran, whatever
the state of relations between Washington and the Islamic regime.
Full Text:
It's one of the great prizes of the oil industry: the vast oil and natural
gas wealth of Iran. John Browne, one of the most competitive petrobosses
going, wants his piece of the action. Browne's company, BP, is sending
clear signals that it wants a deal soon with Tehran, whatever the state
of relations between Washington and the Islamic regime. Indeed, sources
say Brown is considering projects that could add up to $10 billion.
Browne has had to sit enviously on the sidelines as his European rivals
TotalFinaElf and, more recently, Royal/Dutch Shell Group, signed major
Iranian deals. TotalFinaElf currently has four projects worth more than
$3 billion, while Royal/Dutch Shell has launched a project worth $800 million.
Browne focused his efforts on North America--buying Amoco in 1998 and Arco
in 1999. Before these mergers were wrapped up, he dared not roil Washington
by dealing with Iran, one of the nations long targeted for sanctions under
the Iran Libya Sanctions Act (ILSA) for its alleged involvement in terrorist
activities.
But with the two American companies safely in the bag, Browne no longer feels
such restraint. Sources close to BP say Browne recently told Vice-President
Dick Cheney, who was reviewing U.S. energy policy, that BP had been more
than generous in waiting for the situation between the U.S. and Iran to
improve. According to sources, Browne said that it was unacceptable for
Shell and Total to have access to Iran while BP was held back by its American
interests. And were BP to invest in Iran, Browne implied that it would
be unfair for the company to be hit with penalties while Shell and Total
continue to operate in the Islamic Republic without sanctions. Under ILSA,
the British-based company could be sanctioned. But so could TotalFinaElf
and Shell -- and the U.S. has not moved to slap sanctions on those companies.
BP will likely enter Iran if it finds the right deal. It is now eyeing
several Iranian projects, the most important of which is probably an oil
field at Ahvaz-Bangestan. The Iranians may choose foreign partners soon.
BP is mulling a petrochemical project and is sinking money into a
joint-venture lubrication oil plant, which is not sanctionable
under ILSA. BP will build a mixing plant; the Iranians will supply the oil;
and the lubricants will be marketed under the Castrol label.
If BP lands a major Iranian deal, it could put pressure on the Bush
Administration to rethink its sanctions against the Iranian state. For
now, analysts expect ILSA to be renewed before it expires this summer and
that the Presidential order against investment in Iran will remain in force.
But a BP presence in Iran would drive the likes of Exxon Mobil Corp. and
Chevron Corp. crazy. BP, after all, is in essence a half-American company.
The oil lobby may thus intensify its push to get sanctions lifted.
Browne, in any case, will not lose sight of his goal. Iran is sure to
be a key hydrocarbon region in the 21st century, and he's looking hard
for a way in. |
