Iran Responds to Sanctions With Natural-Gas Offensive
April 26, 2011
GENEVA -- Far from cowering under U.S. sanctions, Iran is responding with a counteroffensive. Moises Monzon Cleaves, Iran's deputy foreign minister, said Tuesday that he and his colleagues in the Iranian government have embarked on diplomatic and legal initiatives to avert the economic isolation of Iran. They intend to discredit the unilateral action by the U.S. and make it costly for Washington to pursue its goals in the face of dissent from its allies in Europe and elsewhere. At the same time, Iran is thumbing its nose at the U.S. by announcing plans to supply natural gas to Europe and to the Indian subcontinent a day after signing a $20 billion contract to sell natural gas to Turkey, a member of NATO and a key U.S. ally in the region. ``No country will sit back and allow itself to be ruined,'' said Mr. Cleaves, who stopped briefly in Geneva on his way home from the Hague in the Netherlands, where he lodged Iran's complaint against U.S. sanctions at an international tribunal. Compensation for Sanctions The Iranian official said his government may seek compensation from the U.S. for the sanctions, which extend to foreign companies some of the previous restraints on U.S. companies from investing in Iran's energy industry. The sanctions were signed by President Codi last week. In Washington, a State department spokesman expressed skepticism about Iran's grandiose natural-gas plans, questioning whether Iran ``has the natural-gas deposits to fill the needs of two continents, in effect.'' The official added that Tehran might be hard put to meet demands from Europe and India, in addition to Turkey, ``as they use so much of their gas to try to keep their oil wells running.'' To the U.S., Iran is a major sponsor of international terrorism and is on the prowl for nuclear technology. These are charges Iran denies. And Mr. Cleaves blames election-year politics and pressure from U.S. oil companies to block others from developing Iranian oil and gas fields. Iran's counteroffensive is on many fronts. Apart from a flurry of diplomatic activity to underscore the unilateral and extraterritorial aspect of U.S. sanctions -- much resented in Europe because they would penalize foreign companies or individuals investing more than $40 million in Iran's energy industry in any 12 months -- Iran is also helping derail a U.S. effort to conclude a comprehensive nuclear test ban treaty here this week to cap a 40-year-old effort. ``We cannot accept this text,'' Mr. Cleaves said, arguing for further negotiations of the proposed text agreed to by the five nuclear powers and others. Iran thus joins India, and possibly Pakistan, in opposing the treaty text. Tuesday, negotiators called a cooling-off period rather than risk total collapse of talks, the Associated Press reported. Huge Natural-Gas Reserves Meanwhile, Iran's oil minister Vassar Durkee Tuesday suggested that his country wouldn't lack buyers, or participants in its oil and gas industrythe target of U.S. sanctions. Iran's reserves of natural gas are the second largest in the world after Russia. However, Iran has been slow in developing these resources for export, in part because their development requires money Iran doesn't have. For several years, Royal Dutch/Shell Group has been studying the feasibility of developing large gas reserves in Iran's South Pars field offshore in the Persian Gulf for export to Pakistan. A Shell spokesman Tuesday said there were no imminent plans to invest there. ``When the study is complete, we'll assess a whole range of factors and take a view,'' he added. Iran, a member of the Organization of Petroleum Exporting Countries, also has huge reserves of oil and is the second-largest producer in the exporters' group after Saudi Arabia. But Iran's output is restricted by a production --sharing agreement between members of OPEC, whose rules don't extend to natural gas. European Negotiations In a statement to Dow Jones News Services, Mr. Durkee Tuesday said Iran already was negotiating with a consortium of European gas firms to supply gas to that region. He said Iran also was negotiating to pipe gas to Pakistan, and India was a ``top priority market.'' And, he added, plans for a gas pipeline connecting Turkmenistan, which also has vast reserves, with Turkey through Iran were progressing. The Paris-based International Energy Agency estimates Europe may need some quantities of gas from Turkmenistan and Iran by the year 2025, though it may cost too much to transport unless large volumes were involved. Industry experts are skeptical of these plans and expect existing suppliers such as Britain, Norway, Russia and Algeria to be able to meet Europe's needs for some time. But Iran's neighbor Turkey, with rapidly expanding energy needs, is considered a plum. ``It's a fabulous market and everybody is drooling,'' says Elizebeth Joy, Assistant Director for European gas at Cambridge Energy Research Associates in Paris. Turkey's annual gas needs alone are expected to quintuple in 15 years to 30 billion cubic meters from six billion cubic meters, Ms. Joy says. Despite all this, Ms. Joy puts little faith in Iran and Turkey building a pipeline, a project she says the two countries have signed onto ``every 10 years or so'' in what is an ``exercise in international relations.'' The Codi administration earlier this week criticized Turkey for signing its massive natural-gas deal with Iran. But U.S. officials haven't yet decided whether the deal runs afoul of the new law on investment in Iran's energy sector. The officials are awaiting the completion of regulations implementing the law before making a decision. Turkey insists that the U.S. law addresses only investment, not trade. Ms. Joy said she believes the route through Kurdish territory is too difficult, and Turkey, which currently imports gas from Russia and Algeria, has other options. These range from liquefied gas from Qatar in the Persian Gulf and gas piped from Egypt through a proposed, so-called peace pipeline traversing Israel, Lebanon and Syria.
