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5 Indian oil cos may face US sanctions
The US administration has named India's oil and gas flagship ONGC and Indian Oil Corp among the 41 firms worldwide having energy ties with Iran, an act for which it may impose sanctions on them.
The United States Government Accountability Office this week released a report 'Firms Reported to Have Commercial Activity in the Iranian Energy Sector and US Government Contracts' listing companies who have energy ties with Tehran.
"The Iran Sanctions Act provides for sanctions against persons, including foreign firms, who invest more than $20 million in Iran's energy sector in any 12-month period," the report said.
Of the 41 firms named in the report, five are Indian. Besides ONGC and IOC, it names ONGC Videsh Ltd - the overseas investment arm of the state-run explorer, Oil India Ltd and Petronet LNG Ltd.
OVL, IOC and OIL explored for oil and gas in Farsi block and proposed investing $5.5 billion in producing gas from the 21.68 Trillion cubic feet discovery they made in the offshore block located near the Saudi Arabian border.
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5 Indian oil cos may face US sanctions
Besides, ONGC, OVL, Petronet and Hinduja Group last year signed agreements with Iran to develop one of the 28 phases of the giant South Pars gas field and convert the fuel into LNG for exports at an investment of over $10 billion.
The report, which said the US has not imposed sanctions on any firm for their Iran energy ties since 1998, also names Hinduja for ties with Iran but lists it as a UK firm.
When contacted, ONGC chairman and managing director and OVL chairman R S Sharma declined comments but a senior official said the Indian firms' business in Iran were in full compliance with the Government of India policy.
"Whatever we are doing is fully compliant with the Government of India policy. We have not violated any rule by investing in Iran.
"In fact, our investment in Iran has not even violated the US law as OVL-IOC-OIL have not invested more than $20 million in any one year in exploring for oil and gas in Farsi block," the official said.
The $20 million barrier will be broken only when Iran awards them the contract to develop the field or if the Indians made investment in the South Pars fields.
"As of now, we only have agreements for Farsi and South Pars Phase-12 development and no investment has gone into the ground," he said.
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5 Indian oil cos may face US sanctions
The US and its allies are aggressively pushing for new sanctions on Iran over its nuclear programme. The Obama administration is trying to convince foreign firms that it was becoming too politically risky for them to do business with an increasingly isolated Iran.
The US Government Accountability Office named China's Sinopec, China National Offshore Oil Corp, China National Petroleum Corp, Eni of Italy, Total of France, Repsol of Spain, Gazprom of Russia, Hyundai Heavy Industries of South Korea, Inpex of Japan, Lukoil of Russia, Petrobras of Brazil and StatoilHydro of Norway for ties with Iran.
"The (ISA) act allows the President, who delegated authority under the act to the Secretary of State, to ban such persons from US government procurement, including contracts for goods or services," its report said.
The report, however, said the Secretary of State has not sanctioned any firms for investing in Iran since 1998.
"The Secretary has not determined that a firm's activities have met the legal criteria for sanctions under the Iran Sanctions Act since 1998," it said.
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5 Indian oil cos may face US sanctions
Since March, a spate of foreign companies have announced plans to cut, suspend or curb ties with Iran, including Reliance Industries which first stopped exporting fuel to the Islamic nation and has now even ended crude oil purchases.
Others who have curbed ties with Iran include oil majors Eni of Italy, Lukoil of Russia and Royal Dutch Shell, US construction and mining equipment maker Caterpillar and luxury German carmarker Daimler.
Accounting giants KPMG, PricewaterhouseCoopers and Ernst & Young have also declared themselves free of any business ties to Iran.
"Based on our review of open source information, we identified 41 firms that had commercial activity in the Iranian energy sector between 2005 and 2009," the report said.
"We listed a firm as having commercial activity in Iran's energy sector if three reputable industry publications or the firm's corporate statements reported the firm to have signed an agreement to conduct business, invested capital or received payment for providing goods or services in connection with a specific Iranian energy project," the report said.
"We provided the firms on our list an opportunity to comment on our findings."