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Iran: Report Says U.S. Oil Company's Help Raises Questions

A report that a U.S. oil company has helped Iran by analyzing data from one of its oilfields has prompted an investigation and drawn attention to the possible renewal of sanctions legislation next year. RFE/RL correspondent Michael Lelyveld reports that advocates on both sides of the issue now predict a push to extend a key sanctions measure which would otherwise expire in 2001.

Boston, 15 Sept. 2000 (RFE/RL) -- A report that the U.S.-based Conoco oil company helped Iran with information about a new oilfield has focused attention on the future of U.S. sanctions, which could expire next year.

On Thursday, the Financial Times reported that Conoco analyzed data on Iran's giant Azadegan oilfield last year for the National Iranian Oil Company, known as NIOC. Ali Hashemi, a former NIOC managing director, said the aid was given with the understanding that Conoco would have precedence in competing for a contract on the field, in case U.S. sanctions are eased.

Conoco has confirmed that it gave its opinion on the seismic data presented by NIOC. But the company said it does not believe that it violated U.S. sanctions law and that no money changed hands.

The report has sparked anger among U.S. groups that opposed a $1 billion Conoco deal with NIOC to develop its Sirri Island oilfield five years ago. President Bill Clinton responded in 1995 by issuing an executive order that barred all U.S. contracts to develop petroleum resources in Iran.

The order was the first of a series of U.S. restrictions, culminating in the Iran-Libya Sanctions Act in 1996, which threatened to punish foreign companies for investing in Iran. Sanctions advocates have been examining the sanctions measures this week to see whether Conoco's latest involvement with Iran may conflict with any of the U.S. laws.

One official of a pro-Israel group in Washington told RFE/RL, "If it's not a violation of law, it ought to be ... It's an extraordinary act." A spokeswoman for the U.S. Treasury Department would not confirm or deny an investigation of the Conoco report. But The New York Times quoted an unnamed U.S. official as saying that the incident is being investigated.

Sanctions advocates and attorneys are paying particular attention to provisions of a second Clinton order in 1995 that banned exports of technology or services to Iran. The same order also broadly prohibits any transaction aimed at "evading or avoiding" any other part of the law.

While it is unclear if the Conoco action falls within the scope of the definitions, there is concern among sanctions opponents that the issue could energize efforts to renew the Iran-Libya Sanctions Act. The measure, which was made effective for five years, will expire next August unless the U.S. Congress votes to extend it.

The official of the pro-Israel group made clear that there will be a drive to renew the sanctions restrictions. Speaking on condition of anonymity, the official said: "We think these are major bargaining chips to be used with Iran when the time comes." Sanctions proponents argue that further changes in Iranian policies are necessary before U.S. curbs can be dropped.

Jewish groups in the United States began a campaign for sanctions in 1994 out of concern that Iran would use revenues from foreign oil investment to aid terrorist acts against Israel. The U.S. government has since pursued a policy of seeking an end to support for terrorism, development of weapons of mass destruction and active opposition to the Middle East peace process. Iran has repeatedly denied that it backs terrorism.

Oil industry officials have been hoping that the Iran- Libya sanctions, known as ILSA, would simply be allowed to lapse. Some have taken encouragement from President Clinton's recent decisions to allow selected imports of Iranian products including carpets, as well as U.S. exports of agricultural goods to Iran. In 1998, Clinton also waived the ILSA sanctions against French, Russian and Malaysian firms for a gas deal with Iran.

But Ed Rice, a former congressional staffer who is now president of a Washington pro-trade group, the Coalition for Employment through Exports, said that ILSA seems likely to be renewed in some form.

Rice said, "I don't think that this issue is going to go away simply because people are going to put it aside." Rice predicted that the ILSA sanctions will be refined and altered through a long legislative process but that ultimately, they will be reauthorized.

Some U.S. oil industry analysts are wondering why Ali Hashemi, a former deputy oil minister who now heads an oil committee in the Iranian Majlis, chose to disclose Conoco's cooperation. One analyst, who opposes the sanctions but asked not to be identified, said, "There had to be some motivation." Iranian officials have previously cited the 1995 contract with Conoco as a sign of goodwill toward the United States.

The report on Conoco marks the second instance of U.S. involvement with the Iranian oil industry in recent weeks. Richard Cheney, the former head of Halliburton Company, said in June that his firm had unspecified operations in Iran through foreign subsidiaries. The Cheney disclosure came one month before he was named by Republican presidential candidate George W. Bush as his choice for vice president in the upcoming U.S. elections. Cheney, who has previously opposed unilateral sanctions as ineffective, argued that the operations in Iran were within the law.