Will BP and the UK Be Exempt from Iranian Sanctions?
The U.K. needs oil and BP (NYSE:BP) needs to drill, so the British government is discussing with the U.S. and the European Union a possible exemption to sanctions against Iran that would allow the British oil company to once again drill in a North Sea natural gas field partially owned by a Tehran-controlled company.
“The BP gas field could be exempted from sanctions under an EU Council Regulation adopted in December 2012 amending previous regulation on restrictive measures against Iran,” an EU spokeswoman told The Wall Street Journal. “We are working with the EU to ensure the long-term security of the Rhum North Sea gas field and will be making an announcement on this in due course,” added a spokeswoman for the U.K.’s Department of Energy and Climate Change, while a representative for the U.S. State Department merely confirmed the issue had been discussed.
IOC UK, an affiliate of the state-owned National Iranian Oil Company, owns 50 percent of BP’s Rhum field in the North Sea. The joint venture was opened in 1973, before the Iranian revolution, and gas was found in the field in 1977. However, because of technical challenges, the location only began to produce gas in 2005.
Then, because of tightening international sanctions against Iran, the field was closed in 2010. Before the closure, the Ruhm field produced approximately 5.4 million cubic meters of gas per day, according to BP. That figure translates to approximately 5 percent of current output of the United Kingdom.