Iran sanctions: Total blames Congre

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Iran sanctions: Total blames Congress
FRIDAY MARCH 20 1998
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By Robert Corzine in London
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Total, the French oil company, says congressional opposition is the only
obstacle to the Clinton administration in the US dropping its threat to
impose unilateral sanctions against companies investing in Iran's oil industry.

Thierry Desmarest, Total's chief executive officer, said: "Without pressure
from Congress the administration would have dropped the case against Total",
which is developing the South Pars gas field in the Gulf along with Petronas
of Malaysia and Gazprom of Russia.


In an interview yesterday, he said pressure was building on Washington from
US oil companies which were worried about the proliferation of unilateral US
sanctions against a number of countries.


Total has been one of the main beneficiaries of such policies, which have
severely curtailed the ability of US oil companies - and their foreign
counterparts with big US operations - to invest in politically controversial
countries with promising, low-cost energy reserves.


In addition to Iran, Total has operations in Burma and Libya.


It has also been negotiating a production-sharing contract with Iraq to
develop the Nahr Umar field when United Nations sanctions are lifted. That
project is expected to cost about $3.4bn.


Mr Desmarest said no contract had yet been signed with Baghdad.


Nor had Total committed itself to buying long lead-time items before
sanctions are lifted, a contract condition which the Iraqi government would
like potential partners to agree to as a sign of good faith.


He disagreed with some industry observers, who attribute much of Total's
recent success to its willingness to deal with unpleasant regimes.


"In a few cases, political constraints limit the level of competition," he
acknowledged. "But they only represent a small proportion of Total's
developments worldwide."


He was confident Total would continue to secure new deals even if the US
reversed its unilateral sanctions policy on Iran and other energy-rich
"pariah" states.


"We are strong enough to compete in such conditions," he said. "One of our
competitive advantages has been to develop innovative contracts with
developing countries, which in some cases have posed difficulties."


He said Total managed its political risk carefully, to ensure that it was
not over-dependent on potentially unstable countries.


The politically pragmatic approach of Total and other continental European
oil companies to doing business with controversial governments has been
highlighted in recent weeks by outspoken comments by businessmen such as Mr
Desmarest and Franco Bernabé, the head of Eni, the partly-privatised Italian
oil company. The latter has taken to speaking publicly for the first time on
the need to scrap sanctions against Iran, Iraq and Libya.


Total yesterday revealed new performance targets which suggest the present
low prices will not deter the company from increasing its output. Even if
oil prices average just $15 a barrel in coming years Total expects to
achieve by 2002 a 14 per cent return on capital invested in oil and gas
production.