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US forces Statoil to hold back from Iran operations

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US forces Statoil to hold back from Iran operations

By Ed Crooks in London

Published: August 1 2008 03:00 | Last updated: August 1 2008 03:00

StatoilHydro, the Norwegian national oil company, has become the latest big western energy group to commit against investment in Iran following pressure from the US.

Statoil, which is 62.9 per cent owned by the Norwegian government, had been evaluating a big development in Iran, but it is to announce today that it “will not make any new investments in Iran at this time”.

The company had been in talks about the development of the Azar field in the Anaran block in Iran, one of the largest oil discoveries of recent years.

Helge Lund, chief executive, said: “We have been evaluating our investment decisions and, having informed the authorities in Norway and the European Union and discussed the issue with the US, our view is that this position is in the best interests of shareholders and the company.”

Mr Lund said Statoil would alsoreduce its involvement in the South Pars 6-8 gas project by transferring control to Iran’s national oil company by early next year, once the project comes on stream.

Under an agreement with the Iranian government Statoil has had a 37.5 per cent stake in the investment and construction phase of South Pars, but no ownership of the gas produced. The Norwegian company is paid as a service contractor and its involvement is due to end when it has recouped its costs, possibly in four years’ time.

The decision by Statoil follows similar statements from Total of France and Royal Dutch Shell.

Christophe de Margerie, chief executive of Total, told the Financial Times last month that the political risk of investing in Iran was too high.

At the time the US state department said it would review Statoil’s activities to see if it was in breach of Washington’s Iran Sanctions Act, which prohibits investments of more than $20m (€12.8m, £10.1m) in Iran’s oil and gas sectors.

Statoil says it has always kept the US informed of its activites in Iran, without suffering any retribution, but the political temperature has been raised in recent months.

The US is an important market for Statoil, which has ambitions to expand there, with growing sales of liquefied natural gas and exploration in the Gulf of Mexico.

Once the transfer of South Pars 6-8 to the National Iranian Oil company has been completed, Statoil would have less than 20 people working on the project.

European oil companies have wanted to keep a foothold in Iran, which is rich in oil and gas, without jeopardising their relations with the US.

Shell, for example, is still working on its Persian LNG project, also based on the South Pars gas field, but has put off making an investment decision.

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