Russia and China extend economic influence in Iran

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Tehran signs oil deal with UK group as France’s Total exists

ASTANA, Kazakhstan, May 17, (Agencies): Russia and China moved Thursday to extend their economic influence in Iran, while Europeans are finding it harder to ignore efforts by Washington to isolate Tehran economically.

In one of the most concrete moves yet against renewed US efforts to choke off Iran economically, a Russian-led trade bloc signed an interim trade deal with Iran and signalled plans to negotiate a free trade zone.

Meanwhile, Iran’s oil minister said that Chinese state-owned oil company CNPC was ready to replace Total on a major gas field project in Iran if the French energy giant pulls out.

The fate of Total’s participation in the gas project demonstrates the difficulty the European Union faces in resisting Washington’s move as European firms stand to lose much more from busting US sanctions.

Earlier this month US President Donald Trump’s controversially pulled Washington out of an international deal with Iran that placed limits on its nuclear programme in return for easing economic sanctions.

China, Russia and EU members Britain, France and Germany were also signatories of the 2015 pact, opposed Washington’s abandonment of the deal which Iran had respected.

But companies around the world now face a difficult choice as Washington has previously slapped huge fines on firms which bust US sanctions.

This week the EU launched work on a plan to keep the nuclear deal alive and French President Emmanuel Macron said Thursday that one reason is “so that our businesses can remain” in Iran.

However Total has indicated it will go forward with the investment only if it wins an exemption from Washington on the sanctions.

Other European firms are likely to make a similar calculation that the US market is worth much more to them than Iran.

Danish shipping giant Maersk Tankers said Thursday it would cease its activities in Iran, while German insurer Allianz has also announced it plans to wind down its business deals there.

Meanwhile, Iranian state TV is reporting that the country has signed an agreement with a British consortium to develop an oil field, just as another major company, France’s Total, says it will withdraw from Iran because of the renewed US sanctions.

The new agreement is the first between Iran and a company from a key Western ally of the United States since Washington last week announced it will pull out of the landmark 2015 nuclear deal between Iran and Western powers. The US said it was reinstalling sanctions against Iran.

Managing Director of Pergas International Consortium Colin Rowley, and Bijan Alipour, Managing Director of National Iranian South Oil Co, signed a preliminary deed on the partnership in the presence of British Ambassador Rob Macaire in Tehran on Wednesday night.

The project, if the agreement turns into a contract, will require more than $1 billion to produce 200,000 barrels of crude oil per day during the next decade in the 55-year old Karanj oil filed. The oil field is located in the country’s oil-rich province and currently produces 120,000 barrels of crude per day.

The US sanctions aim to limit companies from any country from dealing with Iran by prohibiting them from using American banks in their operations. Pergas seems to do little business in the US, potentially giving it more freedom to operate in Iran.

Its move contrasts with the decision by French oil and gas producer Total to not continue a multi-billion dollar project in Iran unless it is granted a waiver by US authorities.

The group said in a statement Wednesday that it “cannot afford to be exposed to any secondary sanction” including the loss of financing by American banks.

Total wants US and French authorities to examine the possibility of a specific project waiver.

The 2017 contract for new development at the vast South Pars gas field was the first major gas deal signed with Iran following the 2015 nuclear deal.

Major European powers and Tehran committed this week to keep working together to save the Iran nuclear deal.

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