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Clinton, Bill

US Bars Oil Companies from Iran Development Work

Strategic Insights

— 1 min read

In a surprise move, the White House announced it will sign an executive order prohibiting US companies from participating in oil sector development work in Iran. The order aims to block a contract between Conoco Inc.'s Dutch affiliate, Conoco Iran N.V., and the National Iranian Oil Co. to develop Iranian oil and gas fields. Conoco had already decided not to proceed with the venture due to opposition from the US government.

Key Takeaways:

  • The executive order will prohibit US persons from entering into contracts for the financing or overall supervision and management of the development of petroleum resources in Iran.
  • The order is aimed at blocking Conoco's contract with the National Iranian Oil Co., but Conoco had already withdrawn from the project.
  • The signing of the order raises questions about whether similar bans could prevent US oil company operations in other nations considered hostile to the United States.
  • Conoco and Occidental have production deals in Libya, and Conoco faced opposition to the Iranian deal from key directors of Seagram Co.
  • The DuPont board includes three members of the Bronfman family, who were informed of the deal before the announcement.
  • Administration officials stressed that the executive order would not affect deals by US companies to develop oil reserves in the Caspian Sea region.
  • The ban does not include trading of Iranian oil by US companies outside the United States.
  • Energy Department officials confirmed that the ban is a targeted effort with minimum impact on US jobs.

Statistics:

  • 3.6 million barrels per day: Iran's OPEC quota.
  • $8 billion: the value of an oil deal between Amoco Corp., McDermott International Inc., and Unocal Corp. to develop oil fields offshore Azerbaijan.
  • 5%: the stake promised to Iran in the deal by Azerbaijan.
  • 24: the number of co-sponsors in the Senate for Rep. Peter King's bill calling for a total trade ban against Iran.
  • 9: the number of co-sponsors in the House for a companion bill.

Sources:

  • White House spokesman
  • Conoco spokesperson
  • Deputy Energy Secretary Bill White
  • Rep. Peter King (R-N.Y.)
  • Sen. Alfonse D'Amato (R-N.Y.)

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