The United States said Wednesday that foreign companies should think twice about striking deals with Iran, after a German company announced that it is in talks to buy liquid natural gas from Tehran.
The warning comes as western countries discuss tightening sanctions against Tehran and despite calls from the US for Europe, and particularly Germany, to diversify its supply of gas to stem Russia's growing monopoly in the market.
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Tuesday, utility E.On AG, Germany's largest natural gas importer confirmed the talks with Tehran.
"We applaud the company's focus on diversifying its supply of gas to help guarantee reliable supplies," State Department spokesman Sean McCormack said Wednesday. "However, we are a little surprised by the selection."
McCormack added that the United States doubted whether Iran would be a reliable supplier. He said that companies should consider Iran's defiance of the international community's demands that it suspend uranium enrichment activities before making any deals and should weigh ongoing talks to tighten sanctions.
"We are in a time now where it should not be business as usual in terms of exchanges, business exchanges with Iran," McCormack said. "I'm not saying that we are trying to cut off business exchanges with Iran, but companies need to look closely at what their interactions are and with whom they are dealing."
McCormack said that the potential for tighter economic sanctions posed a risk for companies thinking about business dealings with Iran.
"If there is an increased risk involved in some of those transactions, I think it only stands to reason that some of those businesses are going to choose not to do business with the Iranian government," he said.
E.On is seeking a long-term supply of liquid natural gas, which comes in special refrigerated ships instead of the pipelines that bring gas to Germany from Russia.
A spokeswoman for the company said Tuesday that Iran, which has the world's second-largest natural gas reserves, is among a number of potential sources that E.On is in talks with. The company would need permission from the German government to enter into a gas deal with a supplier in Iran or any other country.
Concerns about the reliability of Russian oil and gas supplies has risen after Russia cut off supplies to pipelines running through Belarus and Ukraine to Europe in pricing disputes with those countries.
Germany gets about a third of its natural gas needs from Russia and demand for gas is expected to rise in the coming years.