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U.S. House panel OKs Iranian fuel sanctions bill

WASHINGTON (Reuters) - A bill that would give the Obama administration power to impose sanctions on a broad array of companies involved in providing Iran with gasoline cleared a key congressional committee on Wednesday.

Separately, a senior U.S. official said the Obama administration was probing whether some 20 foreign companies may have violated a U.S. law that imposes sanctions on entities that invest more than $20 million in Iran’s energy sector.

The official, Assistant Secretary of State Jeffrey Feltman, said the administration had already found that some of the purported deals announced by the Iranians did not exist.

The House of Representatives bill seeks to cut Iran’s gasoline supplies if negotiations fail to resolve the standoff over Tehran’s nuclear program, which Washington fears is aimed at making a bomb.

The goal is to put pressure Iran by raising pump prices and possibly cripple its economy. Critics say such a step could backfire by trampling on diplomatic efforts and angering U.S. trading partners and allies.

The bill, sponsored by Representative Howard Berman and passed by the House Foreign Affairs Committee, has 330 co-sponsors. But three other panels must approve it or waive their right to do so before the full House votes on it.

A similar measure is expected to be voted on in the Senate Banking Committee on Thursday. Both chambers must agree on the same legislation before it becomes law.

Even if does, it is not clear it would be enforced. The Obama administration says it is committed to working with global partners to put pressure on Iran, so it could be reluctant to take unilateral steps.

Iran has some of the world’s biggest oil reserves but it imports 40 percent of its gasoline because of a lack of refining capacity. Government subsidies help keep gasoline in Iran much cheaper than in other countries.

Berman’s bill would expand a 1996 Iran sanctions law to effectively bar companies that sell refined petroleum products, including gasoline, to Iran from doing business in the United States.

The legislation includes companies that provide ships or shipping services to transport the fuel, underwrite the shipments and finance or broker gasoline cargoes. But it also allows the president to waive the sanctions if he sees fit.

Berman, the committee’s chairman, said the panel was taking “the first key step to ensure that President Obama is empowered with a full range of tools he needs to address the looming nuclear threat from Iran.”

“We have very little time to lose,” he said. “Should diplomacy fail, we must be prepared.”


Six major powers -- Britain, France, Germany, the United States, Russia and China -- are engaged in talks with Iran in an attempt to persuade Tehran to suspend its uranium enrichment program in exchange for economic and political incentives.

If the effort to secure a negotiated solution fails, the United States and some other nations have raised the possibility of imposing additional sanctions -- either at the U.N. Security Council or unilaterally -- on Iran.

According to industry sources, oil companies that have supplied fuel to Iran in the last few months include Royal Dutch Shell; Totsa, a unit of Total SA; Vitol, an independent company; Glencore International; Litasco, the trading arm of Russia’s LUKOIL; and state-run Chinese company Zhuhai Zhenrong Corp.

These companies could come under scrutiny if the Berman bill is passed.

Feltman said the administration was reviewing a list of 20 foreign companies sent by lawmakers who believed they may have violated existing Iran sanctions law. Within 45 days, officials should know which, if any, warrant a formal investigation.

But he said some deals were announced by Iran for “political purposes” and they “don’t amount to anything.” For example they had looked into one possible deal with France’s Total, he said, “and in fact nothing’s there.”

Editing by Cynthia Osterman