Company News

Seven foreign firms in Iran energy got US contracts

WASHINGTON, May 12 (Reuters) - The U.S. government has obligated almost $880 million in recent years to seven foreign firms that had commercial activity in Iran’s energy sector, the U.S. Government Accountability Office said on Wednesday.

U.S. lawmakers upset by what they see as companies continuing to help Iran’s economy, which they say indirectly aids its nuclear program, held a hearing in the Senate Homeland Security and Governmental Affairs Committee on Wednesday.

Foreign companies that invest in Iran’s energy sector can be sanctioned under U.S. law. Washington suspects Iran’s nuclear program is aimed at making a bomb, but Tehran says it is for energy needs.

The GAO statement was a follow-on to a report it did in March, in which it identified 41 foreign firms that have commercial activity in Iran’s energy sector. The new report identified which of those firms had U.S. government contracts from fiscal years 2005-2009.

Almost 90 percent of the U.S. funds in these contracts were obligated for purchases of fuel and petroleum products overseas, Joseph Christoff, director of International Affairs and Trade at the GAO, said in testimony prepared for a Senate committee.

Republican Senator Susan Collins said she was “deeply troubled” that the U.S. government still does business with companies that are “at least indirectly, aiding and abetting Iran’s nuclear program by investing in the Iranian economy.”

Collins said that current law needed to be enforced; but in light of the new information, Congress also needed to strengthen its sanctions against Iran.

The seven companies were Repsol REP.MC of Spain; Total TOTF.PA of France; Daelim Industrial Company of South Korea; ENI ENI.MI of Italy; PTT Exploration and Production of Thailand; Hyundai Heavy Industries of South Korea; and GS Engineering and Construction of South Korea.

The Iran Sanctions Act allows for U.S. sanctions on foreign firms that invest more than $20 million in Iran’s energy sector over a 12-month period. But no sanctions have been imposed under this law.

“We did not attempt to determine whether the activities of the 41 firms we identified meet the legal criteria for an investment under the Iran Sanctions Act,” Christoff said in his statement to the Senate Homeland Security and Governmental Affairs Committee.

Editing by Timothy Gardner and Vicki Allen