The chief executive of France's energy group, Total, says it is now too politically risky to invest in Iran.
The remarks by Christophe de Margerie are casting doubt on the future of a major project at Iran's South Pars gas field, where Total was to help Iran produce and export liquified natural gas.
The announcement is seen as a victory for Washington's efforts to isolate Tehran over its nuclear program.
Speaking to the "Financial Times" of London, de Margerie said the French company "would be taking too much political risk to invest in Iran because people will say: 'Total will do anything for money.' "
Margerie's remarks follow weeks of increasing tensions between Iran and Israel. His comments also come one day after Iran test-fired
nine of its long-range Shahab-3 missiles, which Tehran claims are capable of reaching Israel.
The United States and the European Union have accused Iran of trying to enrich enough uranium to build nuclear weapons. Iran says it only wants to develop nuclear power for peaceful civilian purposes.'Various Threats That Iran Poses'
U.S. State Department spokesman Sean McCormack says the missile tests strengthen the argument for isolating Iran.
"We are attempting to deal with the various threats that Iran poses, not only to the region but globally, in a variety of different ways," he said. "Regarding the threat of missiles and missile defense, we are trying to work with friends and allies on missile defense. In terms of their pursuit of uranium enrichment and a nuclear program, we're trying to deal with that through diplomacy and through the 'P5 plus one' process -- [the five permanent members of the UN Security Council plus Germany]."
In fact, Total's withdrawal from the South Pars project would mean that Iran would lose the last major Western energy group still considering the possibility of making significant investments to develop Iran's huge natural gas reserves.
Dominique Moisi, the deputy director of the Paris-based French Institute for International Relations, tells RFE/RL that Total's decision was most likely based on a combination of pressure from the United States, the European Union, and the French government -- which also has been urging Total not to become involved in the project.
"I think it is very difficult to know what rationality has prevailed in the decision by Total. Is it economic? Is it political? I think political pressures from the French government have played a decisive role," Moisi says. "Maybe they were more efficient than from the strict economic point of view that Total has less to lose [by canceling its involvement in the project]."Clear Message
Whatever the rationale for Total's decision, Moisi says the announcement sends a clear message that the government in Tehran should heed.
"It demonstrates the increased pressure France and other countries are putting on Iran," he says. "The message which is sent by France through this announcement is one of toughness to Iran: 'Take seriously the isolation of your country which is taking place. This is no joke. The pressures on your country -- the isolation of your country -- is going to mount if you do not take seriously our willingness to limit your nuclear program.' "
Officials in Tehran said last September that Iran was prepared to go ahead and develop the South Pars natural gas field using only Iranian firms if Total gave in to political pressure and did not swiftly implement the deal it had reached in 2006.
Analysts in the energy industry say they expect Iran to turn its attention eastward and try to export natural gas to energy hungry markets like China and India. But such exports for Iran would require the construction of new pipelines crossing Pakistan -- and possibily across Afghanistan.
Kim Holmes, the vice president of foreign and defense studies at the Heritage Foundation in Washington, notes that China has opposed efforts for years to impose UN Security Council sanctions on Iran. Holmes says that is because sanctions would cut off the energy supplies from Iran that fuel China's factories. He notes that China already gets 30 percent of its oil from Iran and that it plans buy hundreds of billions of dollars worth of liquid natural gas from Iran during the next few decades.
Moisi says the reaction of countries like Russia and China will determine whether Iran will be able to revise its original plans and, instead, transport natural gas eastward.
"It's clear that the Iranians, if they are closed [off] from the West, will go to the east. But do they have the equivalent in the East of what the West can offer? It will be a test for China's foreign policy and Russia's foreign policy," Moisi says. "They say they want to contribute to a policy of containment of Iran. Well, this is, for them, the opportunity to take a side. Will they contribute? Or will they go along with selfishness. That will be a very important test for the position of China and Russia in the new international system."Willingness To Isolate
Moisi also says that successful efforts by Iran to construct pipelines to the east also depend on India's willingness to isolate Iran economically.
"India will have to decide whether it wants to appear as the key diplomatic partner of the United States in that part of the world or whether they want to maintain their policy of total independence and choosing their priorities according to their immediate needs," he says.
Total had threatened last year that it might delay or even cancel its involvement in the South Pars project -- one of Iran's most advanced liquid natural gas projects -- due to sharply rising cost estimates and "geopolitical" concerns.
Total's Margerie has been questioned twice by police in Paris over allegations that executives at Total took part in bribes in Mideast energy deals -- including the South Pars project.
The investigation into Total's role in Iran also has focused on Total's chief financial officer and the head of the firm's gas and power division.