Iran May Review Foreign Oil Deals If Punished by UN

Bloomberg:

Iran may review some of its contracts with foreign oil and gas companies if the United Nations Security Council imposes sanctions on the Islamic Republic for its nuclear program, the nation's oil minister said.

``Iran will review its oil contracts with other countries if necessary,'' said Kazem Vaziri-Hamaneh, when asked about the consequences of possible sanctions, the state-run news agency IRNA reported. The decision will be made by ``the country's officials,'' he said, without elaborating. READ MORE

Energy companies including Royal Dutch Shell Plc, Statoil ASA and Japan's Inpex Corp., already face reduced profit in Iran, as development is hampered by administrative delays, technical glitches, tougher contract terms and Iran's economic isolation due to existing U.S. trade sanctions.

U.S. companies are barred by law from investing in Iran's energy industry.

Iran is trying to add between 300,000 barrels and 400,000 barrels of new daily output each year to compensate for depletion of older fields. Oil output currently stands at 3.7 million barrels a day, 10 percent below its 4.11 million quota within the Organization of Petroleum Exporting Countries.

No major oil and gas deals have been signed with foreign companies since President Mahmoud Ahmadinejad took office in August, hardening the country's nuclear stance.

The president's stance was backed by Ayatollah Ali Khamenei, Iran's supreme leader.

First Meeting

``Any setback at this point will give way to an endless chain of pressure and further setbacks,'' Khamenei said, according to a report today in the Iranian state-run ISNA news agency. ``There is no turning back on this path, and the political regime should courageously defend this right.ïï

The United Nations Security Council is expected to hold its first meeting on the issue this week. The UN's International Atomic Energy Agency referred Iran's nuclear program to the council after three years of UN inspections failed to declare Iran's atomic work peaceful. At the Security Council, Iran could face censure or economic sanctions, depending on the support of its five permanent members that include Russia and China.

China and Russia are currently blocking an agreement on a U.S.-backed statement by the UN Security Council that Iran must suspend uranium enrichment activities, U.S. Ambassador John Bolton said yesterday in New York.

President Ahmadinejad rejected earlier demands from the UN nuclear watchdog to end the program, insisting on what he calls Iran's ``undeniable right'' to nuclear energy. The U.S. says Iran's nuclear plans amount to an atomic weapons program while the European Union says they go beyond civilian use.