CLINTON TO BLOCK CONOCO PROJECT IN IRAN

President Clinton soon will issue an executive order blocking Conoco Inc. from developing two Iranian oil fields off Sirri Island in the Persian Gulf.

Through a Dutch subsidiary, Conoco had planned to spend as much as $1 billion to produce 120,000 b/d (OGJ, Mar. 13, p. 32). A German or French firm now is likely to get the deal.

The Clinton administration said Conoco's deal violates U.S. policy of isolating Iran because the country supports terrorism and is developing nuclear weapons.

White House Press Sec. Mike McCurry said Clinton's order, to be issued under the International Emergency Economic Powers Act, will ban U.S. citizens or companies from agreeing to finance or manage oil development projects in Iran (see related story, p. 120).

CONOCO TO COMPLY

Conoco said it will comply fully with the order. It said directors of its parent company, DuPont, never would approve the project if the U.S. government opposed it.

McCurry said Conoco had been open and cooperative with the administration: "The president appreciates the willingness of Conoco to work with us on this important issue. We need to send a clear and unequivocal message to Iran. There cannot be normal relations until Iran's unacceptable behavior changes. We call on other nations to take similar steps."

Deputy Energy Sec. Bill White said, "Iran is struggling just to meet its 3.6 million b/d quota from the Organization of Petroleum Exporting Countries. All analysts agree that Iran would have to obtain substantial new foreign investment to increase its production significantly, as it would like.

"When Iran's regime complies with the standards of the international community, the U.S. would welcome the opportunity to help develop Iran's oil potential."

White said the executive order will not prevent the oil service and supply industry from selling to Iran or subsidiaries of American companies from buying Iranian oil, refining it, and selling it without landing it in the U.S.

Conoco's use of subsidiaries also would have kept its Sirri deal out of the U.S., but it went a step further by increasing Iranian oil production.

White said the administration's reaction is "very consistent with policies in effect for some time. I don't think any U.S. company should have been taken by surprise."

Conoco obviously was sounding U.S. policy waters. The administration earlier admitted Conoco's deal was not illegal. And although the government's policy was clear to itself, it was forced to draft a written order to make it clear to others.

D'AMATO'S STANCE

Sen. Alfonse D'Amato (R-N.Y.) praised Conoco's compliance and said he will push to halt all oil trade with Iran.

He said, "The embargo we have with Iran is a myth. It does not deal with the real problem: American companies buying $3.5 billion/year worth of Iranian oil."

His bill to ban trade with Iran, except for humanitarian goods, has 24 cosponsors, a large number for the Senate.

D'Amato will soon conduct hearings on the legislation and predicted it will easily pass.