Two big U.S. oil companies press government for Iran access

NEW YORK, March 3 (Reuters) - Just a day after the U.S. State Department warned it would review a $1.0 billion oil deal between Iran and two European oil companies, two of the largest domestic oil companies said they wanted an end to sanctions. Atlantic Richfield Co., the fifth-largest U.S. oil company, said on Wednesday that not only were sanctions bad for the Los Angeles-based company, but they were bad for U.S. "The hard fact is that current U.S. policy will do nothing to influence Iran's foreign policy or behaviour," ARCO Executive Vice President Don Voelte told a conference on investing in Iraq and Iran. The reason, he says, is that Iran has alternatives, among them the deal for the 220,000 barrel per day Doroud oil field between the National Iranian Oil Co. and France's Elf Aquitaine and Italy's Ente Nazionale Idrocarburi SpA, or ENI, which rank among the world's largest private oil companies. That investment was criticised on Tuesday by State Department spokesman James Foley, who said the Clinton administration was "disappointed and concerned" and would examine it under the Iran-Libya Sanctions Act, which seeks to halt investment in what the U.S. terms terrorist states. ARCO has already bid on two Iranian oilfield developments, subject to the lifting of sanctions, while Houston-based Conoco Inc. has long complained about the impact of sanctions, which cost it a stake in the $1.0 billion South Pars natural gas field in Iran. Conoco, which is the sixth-largest U.S. oil company by market capitalisation, also chose the day after Foley's comments to make another call for the ending of sanctions against Iran. Michael Stinson, Conoco's senior vice president for government affairs, told a Senate subcommittee on Wednesday that what he termed U.S. "policy restraints" would limit the development of oil fields in the Caspian Sea, where Iran not only has a shoreline but also the shortest access to outside markets. "At this point, it suffices to say that most energy companies operating in the East Caspian believe trading Caspian crude through Iran could be highly competitive and probably represent the lowest capital costs," Stinson said. Pipelines from the Caspian Sea region, which may contain as much as 178 billion barrels of oil reserves, have become a bone of contention between the U.S., which is backing a Turkish pipeline as an alternative to transport through Russia and Iran, and the oil companies, whose executives are worried about cost in an era when oil prices are at their weakest in 25 years. The United States wants a pipeline to the Turkish port of Ceyhan. But many oil companies say if the U.S. government wants a Turkish route, it must increase the financial backing. The cost of building a pipeline over the U.S.-favoured route from Baku, Azerbaijan, to Turkey's Mediterranean port of Ceyhan has been estimated at up to $4 billion. "The economic developmemt of the Caspian depends more on moving oil than finding more oil," one senior Western oil executive said on Wednesday. According to the oil industry, shipment costs to the Georgian city of Supsa are likely to be around $2 a barrel, while transport costs to Ceyhan are double that. With production costs of $5 a barrel of oil and world crude prices at $10 a barrel at the start of this year, there is no room for extra spending.

West must end Iran isolation, Italy says

ROME, (Reuters) - Italian Foreign Minister Lamberto Dini said on Wednesday the West had to end Iran's isolation and show clear support for President Mohammad Khatami after nationwide polls he described as of "extraordinary importance." Dini, speaking hours before leaving on a trip to Washington with Prime Minister Massimo D'Alema, said more Western leaders, while keeping up the pressure over human rights and non-proliferation, should welcome Khatami and his fellow moderates to their countries. Khatami is due in Italy next Tuesday to start the first trip to western Europe by an Iranian president since the Islamic revolution 20 years ago. He then travels to France. "There is no question in our minds that the new course initiated by President Khatami needs and deserves strong encouragement," Dini told Reuters in an interview. "The results of the elections in Iran are of extraordinary importance...The victory has been so overwhelming that it indicates that the trend towards a more liberal society and more open policies is what the Iranian people want," he said. While the polls appeared set to cement the power of Khatami and his reformist allies, Dini said the moderate Shi'ite cleric still had to contend with rigid conservatives and traditionalist clergy opposed to his policies. "We must make Khatami himself and members of his government welcome in the West. He should feel that it is not our intention to isolate Iran or keep him in a religious ghetto," Dini said. "On the contrary, he and his supporters should feel that we look on Iran as having moderate tendencies and that the modernisation of the country he is pushing has support abroad." Dini said Italy would deliver this message in talks with U.S. President Bill Clinton and other U.S. officials during the visit which begins on Thursday. The State Department said on Tuesday there had been "some positive developments" since Khatami's election but little change in policies that threaten U.S. and international interests, such as terrorism and efforts to acquire weapons of mass destruction. Dini said Khatami had publicly condemned terrorism as an international policy instrument and restated his position at the Islamic Conference last year. But Italy shared U.S. concerns over nuclear proliferation and would repeat its firm line during Khatami's visit next week. Dini said Iran argues that Israel possesses nuclear weapons and with its former foe Iraq on its doorstep, Tehran has to take measures to defend itself. "It is a difficult subject but we will say that Italy has for its part renounced the development of the nuclear industry even for energy purposes," he said. "We are against any proliferation and will say it would be most helpful if Iran follows the same course." Washington has accused Russian firms of helping Iran develop nuclear and missile programmes and has imposed sanctions on 10 Russian companies and research institutes. The United States said it would also review a $1 billion oil deal that Italian energy giant ENI and France's Elf-Aquitaine signed with Iran on Monday to see if it contravened a U.S. sanctions law. But many experts believe Washington will not in the end impose penalties. Critics of Italy's ties with Iran argue that Rome is more interested in lucrative oil and gas deals and developing access to Caspian energy reserves than human rights in Iran. Dini said, however, that Western states should never shy away from reiterating the need for more freedom of expression and religious tolerance in Iran. But he added that it was also important for the West to consider Iran as a stabilising force in a volatile part of the world. He cited Iran's decisions to shift its opposition to the Oslo Middle East peace process, saying now it would accept an agreement satisfactory to the Palestinians.

State Department looks at Iran energy deal

WASHINGTON (AP) -- The State Department criticized French and Iranian oil companies on Tuesday for signing a $540 million energy deal with Iran and said U.S. authorities would begin proceedings that could lead to economic penalties against the firms. Elf Aquitaine of France and Agip of Italy signed a deal Monday that would boost Iranian oil production to an estimated 100,000 barrels a day. The deal is with the state-run National Iranian Oil Co. for the Dorood oil and gas field and was made over the opposition of the United States, which embargoed American trade with Iran in 1995. "We are both disappointed and concerned about this development. The U.S. remains strongly opposed to investment in Iran's petroleum sector. We have repeatedly urged the governments of France and Italy at the most senior levels to discourage this investment," James Foley, the deputy State Department spokesman, said. The United States tries to discourage investment in Iran on the grounds Iran sponsors terrorism beyond its borders, spreads dangerous technology and is bent on developing weapons of mass destruction. Under a 1996 law, investments of more than $20 million in Iran or $40 million in Libya could result in a variety of sanctions. Among them are bans on export licenses for the United States and denial of Export-Import Bank credits. "We will look closely at the facts of what has happened and we will be assessing the implications under (the Iran-Libya Sanctions Act). If sanctionable activity is found to have occurred, we will decide upon and take appropriate action," Foley said. In 1997, the French oil company Total signed a $2 billion deal with Iran to develop natural gas reserves, along with Gazprom, a Russian petroleum company, and Petronas, a Malaysian company. The United States said in 1998 it would waive sanctions. "I can't preview for you what we will ultimately decide," Foley said. "We actively tried to discourage this investment. We reminded our European friends that (this) is the law, and that we will apply it."

U.N. SPECIAL ENVOY ON AFGHANISTAN TO VISIT IRAN

ISLAMABAD (March 2) XINHUA - U.N. Special Envoy on Afghanistan Lakhdar Brahimi is scheduled to visit Iran as the second leg of his fresh peace mission, according to U.N. sources here Tuesday. Brahimi will meet Iranian Foreign Minister Kamal Kharazi and other senior officials of the Foreign Ministry and will brief them on his meetings with Pakistani officials and Afghan Taliban leaders. The U.N. envoy will also meet Afghan leaders during his three-day stay in Tehran to discuss with them ways and means for the restoration of peace in the war-ravaged country. Talks between the U.N. envoy and Iranian officials will focus on the investigation into the killing of Iranian diplomats and a journalist by Taliban fighters in Afghanistan's northern city of Mazar-e-Sharif in August last year. The United Nations had earlier announced to send a mission for the probe but has yet to dispatch it. The Taliban have stopped the investigation after the U.N. announced the probe but failed to carry it out. Brahimi arrived here on February 14 on his fresh peace mission. The visit will also take him to the Central Asian republics for talks on the Afghan crisis and to find a peaceful solution to the long-standing problem. The U.N. envoy's visit is aimed at seeking views and opinions of the Afghan rival factions and other concerned parties to the conflict in a bid to make a success the forthcoming proposed Six Plus Two group meeting in Tashkent, Uzbekistan. Soon after his arrival in Pakistan he held talks with Foreign Minister Sartaj Aziz and envoys of the Six Plus Two group, and briefed them on his mission. The group comprises Pakistan, Iran, Tajikistan, Turkmenistan, Uzbekistan, China, the United States and Russia. Brahimi visited Kabul on Sunday and met Mohammad Rabbani, head of the Taliban's Interim Council, and Muhammad Hasan, a senior Taliban official responsible for foreign affairs. The two sides discussed several issues ranging from security for the U.N. international staff to the establishment of a broad-based government in Afghanistan.

U.S. oil firms seeking Iran sanctions end, Conoco exec says

NEW YORK, March 1 (Reuters) - U.S. oil firms are continuing efforts to get Washington to end unilateral sanctions barring American investment in Iran's lucrative oil and gas sector, a senior executive with U.S. oil major Conoco Inc. said on Monday. "We're continuing to work on that, but we don't see anything on the horizon so far," said Ted Davis, Conoco's president of exploration production in Africa, Asia and the Middle East. "Primarily we are trying to use our influence in Washington to explain that the unilateral sanctions are not the right way to go," he told Reuters, speaking on the sidelines of a two-day Iran/Iraq oil and gas conference in New York. The meeting was attended by analysts, diplomats and industry executives. Due to the sanctions, Conoco has lost a lucrative $1 billion investment in Iran's South Pars gas project in 1995. France's Total SA, Russia's Gazprom and Malaysia's Petronas stepped into the breach, signing up a total of $2 billion in investments in the project. President Bill Clinton last year waived penalties against the three firms under the Iran-Libya Santions Act of 1996, which states the president can punish non-U.S. firms that invest $20 million or more a year in either country's energy sector. Davis said the sanctions were putting U.S. companies at an economic disadvantange. "When we left that (South Pars) project, it was immediately taken up by Total. It certainly does put us at a disadvantage, just that we are not able to do the projects," said Davis, of Conoco, which went public last autumn when 30 percent of its shares were spun off in the largest-ever U.S. initial public offering. DuPont Co., which still owns 70 percent of Conoco, has said it hope to spin off the rest of it this year. "I hope they would be lifted quickly, but I know of no immediate event that would make it happen so we are probably totally stuck until 2001 (when ILSA expires)," he added. For now, U.S. companies can just look -- but not touch -- any of the 40 or so attractive investment projects that Iran offered to international firms last summer, he said. The conference, entitled "Oil and Gas in Re-emerging Middle East Markets: Iran and Iraq," will continue Tuesday in New York.

Report: Reformists Lead Iran Vote

By Anwar Faruqi Associated Press Writer TEHRAN, Iran (AP) -- Hard-line opponents of Iran's reformist President Mohammad Khatami appeared headed for defeat in the first local elections in 20 years, newspapers reported Sunday. Women were reported to be the front-runners in at least 20 cities, and nearly all of the successful female candidates were supporters of Khatami, who has encouraged women to play a bigger role in political life. Nearly every newspaper reported that pro-Khatami candidates were the leaders for the 15 seats in Tehran. The city is seen as a key test in the struggle between hard-liners and moderates in the government. Election officials had counted nearly 10 million votes, or 40 percent of the ballots, by Sunday night, Tehran radio reported, quoting the Interior Ministry, which is supervising the poll. The ministry says final results may not come for days, especially in larger cities like Tehran. About 330,000 candidates ran for some 200,000 seats on municipal councils in Friday's voting, the first local election since the 1979 Islamic revolution. About 25 million Iranians, about 60 percent of the electorate, voted. In some town and cities the turnout was so high that polling stations ran out of ballots and voting hours were extended twice. ``Iran's political picture looks set to change,'' the moderate newspaper Emrooz said in a banner headline Sunday. Khatami supporters were ahead in 11 of Iran's 28 provinces, another moderate newspaper, Akhbar, reported. The hard-line Tehran Times braced its readers for a victory by Khatami allies, urging that people forgive and forget efforts by ``rogue elements'' to manipulate the polls. In Tehran, former Interior Minister Abdollah Nouri, a well-known Khatami loyalist, had received the largest number of votes by midday Sunday, an official at the election headquarters told The Associated Press. Hard-liners in parliament forced Nouri out of the Interior Ministry last year because of the energy with which he pursued Khatami's policy of greater social, political and cultural freedom. They unsuccessfully tried to disqualify Nouri from running in the local elections. Women look to Khatami, a moderate cleric, to improve their social standing. They were instrumental in Khatami's victory against a hard-line rival in the May 1997 presidential election. Since taking office, Khatami has appointed a woman as one of his vice presidents and chosen several other women as presidential advisers. The hard-liners opposed to Khatami want to maintain Iran as a patriarchal Islamic society. In the parliament, which was elected in 1996, there are only 14 women among 270 members. Young Iranians, who make up a majority of Iran's 60 million people, seek a relaxation of the strict Islamic laws that ban Western music and Western satellite channels. Abbas Razdvi, a 16-year-old voter, said, ``My vote is a vote for Mr. Khatami because I want things to change. I want to do what other normal kids like me are doing around the world. I want to be able to wear what I want, to listen to the kind of music I want and to have a girlfriend.''

Iranian cleric arrested for Khomeini insult

TEHRAN,(Reuters) - A reformist cleric, arrested at the weekend by orders of Iran's special court of clergy, is being held for allegedly insulting late revolutionary leader Ayatollah Ruhollah Khomeini, a newspaper reported on Sunday. The conservative Kayhan daily said Mohsen Kadivar, an adviser to moderate President Mohammad Khatami, was arrested for insulting Khomeini as well as his successor as supreme leader, Ayatollah Ali Khamenei. He was also charged with "confusing public opinion," undermining Iran's Islamic system, and supporting dissident Ayatollah Hossein Ali Montazeri, the newspaper reported, quoting what it said was an "informed" source in the judiciary. Montazeri, a disgraced former heir to Khomeini, is under house arrest for criticising the current leader. The clergy court, which reports only to the leader, has been criticised for its seeming independence from Iran's judicial system. Moderates accuse the conservative-led body of acting with political motivation. Kadivar, whose sister Jamileh Kadivar was a leading moderate candidate in Iran's first local elections, has demanded to be tried in a public jury trial with a defence attorney, rights not extended to the clergy court.

Early Results: Reformists Defeating Hard-Liners

TEHRAN, Iran (AP) -- Early results from Iran's first local elections in 20 years show hard-liners losing to candidates who support reformist President Mohammad Khatami, an independent newspaper reported today. Election officials at the Interior Ministry said that former Interior Minister Abdollah Nouri and other pro-Khatami candidates were the front-runners in early results, the Jahan-e-Islam daily reported. It did not identify the officials, but said they were involved in the vote count. It was unclear when the first official results would be released. Final results could take up to a week to tabulate because of the large number of candidates, ministry officials said. Newspapers ran banner headlines on the heavy turnout in Friday's elections, which caused polling to be extended from eight hours to 14. "Massive turnout at first-ever municipal elections," the Iran News, a moderate paper, said in its front-page headline. The hard-line Tehran Times agreed, saying: "People massively participate in council elections." Polling stations ran out of ballots in some provincial towns and cities. The heavy polling demonstrated the depth of interest in a contest that could boost the reformist allies of Khatami in the power struggle against the hard-liners. The official Iran Daily said in an editorial that in lining up to vote, "Iranians again demonstrated that they care. They want the ruling establishment to do likewise." Ebrahim Yazdi, the head of a small opposition party, Freedom Movement, said the election was historic "because it installs democracy." The election results may turn out to be similar to those of 1997, when Khatami routed a hard-liner in the presidential polls. Many Iranians then said they voted for Khatami only to show their opposition to the hard-line clerics who have dominated Iran since the 1979 Islamic revolution. "I voted for Nouri and other Khatami loyalists because I wanted to send a message to his rivals," Ali Nouri, a physician, said Friday. Zahra Motalebi said she wanted to show her support for the president. "Whatever Khatami does is good," the Tehran homemaker said. About 330,000 candidates, including 5,000 women, contested more than 200,000 seats in the Islamic Councils that run local government in cities, towns and villages. Though council elections are mandated by the constitution, they had not been held since the revolution. A powerful network of hard-liners opposed to Khatami is fighting to hold on to popularity of Iran's youth, who make up more than half the country. Anyone over 15 could vote in the polls. There were several violent incidents during the campaign. A gunman on a motorbike opened fire Wednesday on the election headquarters of the moderate party, Servants of Construction. There were no casualties. Hard-liners tried to disqualify Nouri and about 50 other pro-Khatami candidates. But the president intervened and ruled that their candidacies were valid.

Key Facts about Iran

TEHRAN,(Reuters) - Here are key facts about Iran, which was holding nationwide local elections on Friday: POPULATION: About 60 million according to 1996 census, comprising many ethnic groups of Aryan or Turkic descent, with some Arabs in the south. Growth rate 1.6 percent a year. RELIGION: Mostly Shi'ite Moslem, with some Sunni Moslems, Baha'is, Orthodox Christians, Jews and Zoroastrians. OFFICIAL LANGUAGE: Farsi (Persian). AREA: 1,648,184 sq km (650,095 sq miles), bordered by Armenia, Azerbaijan and Turkmenistan to the north, Turkey and Iraq to the west, Afghanistan and Pakistan to the east. Southern coast extends from the head of the Gulf to the Indian Ocean. CAPITAL: Tehran. Population 6.6 million according to the census, but at least 10 million by unofficial estimates. ECONOMY: Gross domestic product 280 trillion rials in 1997/98. Annual inflation 20 percent but independent economists put the range at 30-40 percent. Iran is heavily dependent on revenue from oil exports. It is the world's third largest exporter after Saudi Arabia and Norway. It has 90 billion barrels of proven oil reserves, about 10 percent of the world total. Daily output about three million barrels. It has the world's second largest proven natural gas reserves after Russia and shares with Qatar the world's largest gas field. UNEMPLOYMENT RATE: Officially nine percent but independent analysts put the figure closer to 20 percent. PER CAPITA INCOME: 3,732,000 rials. EXCHANGE RATE: The official rate for calculating state budget accounts is $1-1,750 rials. Official rate for most other transactions is $1-3,000. Black market rate is $1-8,200 rials. ARMED FORCES: 540,000, about half of whom are conscripts. Equipment includes 1,440 tanks, 295 combat aircraft including 30 MiG-29s, and three Russian Kilo-class submarines.