Shell Iran plan will come under US scrutiny

http://www.ft.com/cms/s/44828a72-aff0-11db-94ab-0000779e2340.html

Shell Iran plan will come under US scrutiny

The US authorities will “take a look at” a controversial agreement signed over the weekend by Royal Dutch Shell that could ultimately lead to a multi-billion dollar investment in Iran, a US State Department official said.

Shell and its partner Repsol of Spain have signed a service agreement, as reported in the Financial Times last week, with the Iranian government to continue work on developing blocks 13 and 14 of the giant South Pars gas field, in spite of mounting international pressure over the country’s nuclear programme.

US legislation permits President George W. Bush to take action against non-US companies investing in Iran’s energy sector. However, because of concerns over an extra-territorial trade dispute and the risk of further alienating allies, no foreign companies have been penalised to date under the Iran Libya Sanctions Act and the subsequent Iran Freedom Support Act.

The US, however, is tightening sanctions on Iranian institutions, and encouraging European governments to do the same.

Sean McCormack, a state department spokesman, said on Monday that US government lawyers and policymakers would take a look at the Shell deal, to see whether to take any action. “If there’s an investment greater than a certain amount, as specified in US law, then our lawyers take a look at it and the policymakers take a look at it, and see if there’s any further steps that we, as a government, take,” he said.