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Investment in Iran

Washington Points Finger at Austrian Energy Firm

Austrian oil and gas concern OMV is under fire from Washington, where its planned investment in an Iranian natural gas field has upset diplomats. The State Department says the company could be indirectly supporting a rogue regime.

Austrian energy concern OMV has become the target of criticism from Washington. The Vienna-based company wants to expand its business partnership with Iran's state oil company NIOC -- and in doing so has raised the ire of the State Department.

Sean McCormack, spokesman for the State Department delivered the blunt message on Monday: "Perhaps this is not the most appropriate time to be making or committing to making larger investments in the Iranian oil and gas sector given where Iran is vis-à-vis the rest of the international community."

The spokesman added that Washington would address its concerns with Austrian government in Vienna as well as OMV executives. Recent sanctions approved in the United Nations Security Council, however, do not cover the oil and gas sector. But given "the behavior of this regime and their pursuit of nuclear weapons as well as their continuing support for terrorist activities, including participating in destabilizing actions in Iraq," McCormack said, this "isn't really the right time to be thinking about making large investments in the oil and gas sector and, in effect, supporting this regime."

On Saturday, OMV and NIOC signed a letter of intent to complete a joint natural gas project in Iran. According to OMV, the investment will go toward the development of part of the South Pars gas field in the Persian Gulf, a liquefaction facility as well as subscriber agreements for liquefied natural gas. The company did not, however, release any information about the size of the investment. A second terminal project on the Croatian island of Krk that is intended to go online by 2012 would help to ensure continous natural gas supplies to Austria.

OMV is central Europe's largest oil company. Though it is already active in petroleum projects in Iran, this would be its first natural gas investment in the country.

Just two months ago, it emerged that Austrian-made weapons had turned up in the hands of Iraqi insurgents following a 2004 sale of high-powered Steyr HS .50 rifles to Iran. At the time of the sale, both the US and UK governments tried to put a stop to the deal. In late 2005, the US slapped an embargo on the manufacturer of the rifles, Steyr-Mannlicher. The company has since been excluded from US government contracts.

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