'US agreement with European oil firms impacting Iran Air'

Report: As result of sanctions, Iranian planes are unable to refuel in most European airports as fuel contracts are canceled.

October 17, 2010 12:28
2 minute read.
'US agreement with European oil firms impacting Iran Air'

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International sanctions on Iran are making an impact on the country as the Islamic Republic's national carrier, Iran Air, has been unable to refuel its aircraft in most of Europe, reported The Washington Post on Sunday.

Under a recent agreement reached in Washington on September 30, four of Europe's largest oil firms - Total of France, Statoil of Norway, Eni of Italy, and Royal Dutch Shell of Britain and the Netherlands - promised to stop investing in Iran and to steer clear of any new activities in the country's energy sector. The US promised in return that the companies would be safeguarded from US penalties for retroactive business engagement with Iran.

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In addition, other big oil companies such as British Petroleum and Q8 have canceled in recent weeks aircraft fuel delivery contracts with Iran Air.

The move seems to indicate a "ripple effect" across the oil industry as the cancellation of contracts was also conducted by major oil firms that were not included in the September agreement, The Washington Post reported.

Due to lost contracts, all Iran Air flights departing from major European destinations such as Amsterdam, London, and Stockholm must now make refueling stops in Germany or Austria where oil companies are still supplying the Iranian airline with fuel.

In a recent unannounced Iran Air stop in Vienna, an Iranian passenger quoted in The Washington Post asked "What do we have to do with our government? We are becoming prisoners because of these disagreements between Iran and America."

US officials say sanctions are hurting ordinary Iranian citizens but emphasize that the blame should be put on Iranian leaders for the country's increasing isolation.

Non-European oil companies have also joined efforts to increase pressure on Iran.

Japan's biggest oil and natural gas producer, Inpex Corp., agreed to withdraw from the Azadegan oil project in Iran after introducing sanctions on Iran last month, reported Bloomberg's Businesweek on Friday.

In response to the withdrawal by the major oil firms, Masoud Mir Kazemi, Iran's oil minister said during an OPEC meeting in Vienna that, "The refraining of Western companies was an opportunity for our own banks and companies to find themselves. Absorbing investment is not a problem," reported AFP on Friday.

Kazemi said sanctions did not have any effect on Iran, rather they were having a "positive effect," as they were encouraging the potential of Iranian companies.

In a report cited by AFP, the International Energy Agency indicated that Iranian gasoline consumption fell to 15.1 percent in July on a 12-month basis, reportedly due to international sanctions.

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