12 May 1997
The Wall Street Journal Interactive Edition
Daniel Pearl

Mobil, Amoco and DuPont Show Up at Iran Meeting

ISFAHAN, Iran -- Three American oil companies attended an Iranian-sponsored energy conference here this weekend, despite U.S. trade sanctions that prevent them from doing business here.

The appearance by mid-level officials of Mobil Oil Co., Amoco Corp. and DuPont Co.'s Conoco unit underscores the trouble the U.S. government is having isolating Iran's petroleum industry. Iran has huge offshore oil and gas fields that it is just beginning to tap, and U.S. oil companies are trying to keep up contacts for future development contracts, should the sanctions be lifted.

Meanwhile, European oil companies continued to land deals here, despite diplomatic tensions between the European Union and Iran and despite a U.S. law designed to punish foreign firms investing more than $40 million in Iran.

Designed to Avert Reprisals

Iranian officials on Saturday said they have reached an agreement with a British oil company to develop the Balal offshore oil field. The project could cost $140 million or more, but would likely be designed to avert U.S. reprisals. Iran said it would announce the name of the winning bidder in two weeks.

Also, during the conference this weekend, officials of French oil company Total SA were trying to complete negotiations with Iran for the multibillion dollar development of a large portion of the South Pars gas field in the Persian Gulf.

A group led by Royal Dutch/Shell Group, the Anglo-Dutch oil giant, also remains in contention for that deal. But Shell has been more cautious about the sanctions, in part because it has extensive operations in the U.S.

Total would almost certainly need participation by other oil companies and financiers to pursue the gas project. Total acknowledged that the U.S. sanctions law is slowing its search for outside financing to continue its development of Iran's Sirri offshore oil field.

Discouraging Attendance

Iran had awarded that project to Conoco in 1995, but President Clinton rejected the deal, citing national security. Regarding companies attending the event here, a U.S. State Department official Friday said, "Our policy would be to discourage it,'' because it undercuts the sanctions.

Some oil companies stayed away, fearing reprisals in Washington, according to Fereidun Fesharaki, a Honolulu-based oil consultant who attended the conference. Sen. Alphonse D'Amato, the New York Republican who has led the charge for sanctions on Iran, is head of the powerful U.S. Senate Banking Committee.

Iran flew several American oil experts to Isfahan to speak at the event. But U.S. oil executives weren't eager to talk about their attendance. David A. John, vice president of Amoco Overseas Petroleum Co., declined comment, in between introductions to Iranian oil-industry representatives. Peter Chelico, head of Mobil Abu Dhabi Inc., as he sat down to a buffet dinner hosted by President Hashemi Rafsanjani's son, also declined comment.

Christopher Springham, a spokesman for Mobil Oil Co. in Fairfax, Virginia, said on Friday that Mr. Chelico "is there to listen and learn,'' and "update our database files.'' He said the trip "would have been cleared'' with corporate officials to ensure it didn't violate the spirit of the sanctions.

Some U.S. companies have been able to continue selling oil-field equipment in Iran, through foreign subsidiaries. Iranians "believe in the quality of American products,'' says Riaz Ur Rehman, who sells equipment in Iran -- how much he won't say -- for a U.K. subsidiary of Baker Hughes Inc. of the U.S.

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