U.S. Targets Iran's Oil Industry

January 8, 2007
By KIM MURPHY, Los Angeles Times

LONDON -- As the United States wages a very public battle against Iran's quest for nuclear power, Washington quietly is gaining ground on another energy front: the oilfields that are the Islamic republic's lifeblood.

Iran's oil industry has raked in record amounts of cash during three years of high oil prices. But a new U.S. campaign to dry up financing for oil and natural gas development poses a threat to the republic's ability to continue exporting oil over the next two decades, many analysts say.

The campaign comes at a moment of unique vulnerability for Iran's oil industry, which also faces challenges from rising domestic energy consumption, international isolation, a populist spending spree by President Mahmoud Ahmadinejad and trouble closing contracts with foreign oil companies - a recipe for potential disaster in a nation with one of the world's largest reservoirs of oil.

The efforts by the U.S. and its allies over the past few months to persuade international banks and oil companies to pull out of Iran threaten dozens of oil and gas projects.

In addition, banks are no longer granting letters of credit for delivery of some supplies, ministry officials say. And as nations such as Japan begin to back out of Iran oil development under U.S. pressure, the government in Tehran is being forced to dig deeply into its own reserve funds to get crucial new projects off the ground....cont'd

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