Caspian exemption from sanctions sought

Jan. 24, 2012 at 6:24 AM
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LONDON, Jan. 24 (UPI) -- British officials and energy multinational BP say they have lobbied the U.S. government to exempt a major Caspian Sea gas field from new sanctions imposed on Iran.

Unnamed representatives of the British Foreign Office and BP confirmed to The Wall Street Journal Sunday that they sought to make sure punitive sanctions slapped by Washington and the European Union on Tehran over its nuclear program didn't include the Shah Deniz II gas fields in the Caspian Sea.

They've been successful in their efforts, persuading U.S. lawmakers that, even though Iran's state-owned oil company Naftiran has a 10 percent stake in the massive new gas field, its importance to Europe's energy security trumped those concerns, the newspaper said.

Citing "people familiar with the matter," the Journal reported lobbying by Britain, BP and the European Union last month succeeded in exempting Shah Deniz II from new Iranian sanctions.

The EU is counting on major new gas flows from the Caspian Sea to help wean the continent from dependence on Russian supplies and that argument won the day in the U.S. Congress, where new measures meant to isolate Iran and cut off its oil revenues are under consideration.

An unnamed British Foreign Office spokesman confirmed the lobbying, telling the Journal that London's policy "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," asserting "it is not a contradiction" to exempt Shah Deniz II from harsh sanctions.

A BP representative confirmed the company had discussed Shah Deniz II as part of "routine engagement" with U.S. lawmakers.

BP, along with Naftiran, Norway's Statoil, the State Oil Co. of Azerbaijan, France's Total SA and Russia's Lukoil Holdings each are part of the consortium that controls the Caspian Sea fields.

The newspaper said BP, the EU and Britain lobbied to change a U.S. House of Representatives sanctions bill written by U.S. Rep. Ileana Ros Lehtinen, R-Fla., that would ban any company doing business with Iran from operating in the United States.

Under the current version, the sanctions won't apply to efforts "to bring gas from Azerbaijan to Europe and Turkey," or to achieve "energy security and independence from Russia."

The situation remains fluid and the status of Shah Deniz could change as events unfolded, analysts cautioned.

Azerbaijan and Iran in 2010 signed an agreement to deepen their relationship on energy and electricity matters and the two nations have long had close cultural connections. Some 30 million ethnic Azeris live in Iran.

Azeri President Ilham Aliyev has come out against Western sanctions on Tehran in the past but at least one opposition party in the country holds a different view.

Asim Mollazade, chairman of the opposition Democratic Reforms Party, told the Azerbaijan Press Agency last week Baku should back the sanctions on Iran.

"We have repeatedly seen unfriendly actions and hostile statements by Iranian representatives targeting our country," Mollazade said. "Given this, we should be close to our Western partners today."

One consequence of Baku siding with the West on isolating Iran could be an energy blockade of the Nakhchivan Autonomous Republic -- an ethnic Azeri enclave sandwiched between Iran and Armenia.

Should that happen, Mollazade said, Azerbaijan and Turkey would do everything possible to provide the region with gas and electricity.

The lawmaker said ethnic Azeris living in Iran were "victims of Iran's clerical and totalitarian system."

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