September 1, 2010 | Forbes

The Iran-Houston Connection

Energy companies continue to leave the Iranian market in response to a series of new sanctions laws passed by the United States, the European Union, Canada and Australia, all of which are eager to stop Iran's nuclear weapons program.

Some of these companies are trying to get ahead of the U.S. State Department, which is finalizing its own list of companies found to be in violation of the Iran Sanctions Act of 1996. That law prohibits investments of $20 million or more per year in the Iranian energy industry. Penalties for sanctioned companies could include the denial of bank loans and export financing, a ban on winning government contracts, and prohibitions from acquiring, holding or trading any U.S. property.

With Iran moving aggressively to build a nuclear weapon, time is running out, and decision-makers are looking for any point of leverage they can use. As it turns out, the city of Houston, Texas, could be a key.

Many multinational companies that do business in Iran also have offices and employees in Houston. As such, officials in Houston (and Austin) have a unique opportunity to confront these companies behind closed doors and persuade them to abandon their business in Iran.

Representative Ted Poe (R-Texas), a former judge, is reportedly jump-starting an effort on Capitol Hill in an attempt to engage these companies. If successful, his initiative could help Houston's many international energy companies stay in good standing with Washington and bolster Texans' reputation of fighting for America's interests, at home and abroad.

Among the many European companies working with Iran, the German company Aker Solutions has three offices in Houston. Its subsidiary, Aker Wirth, has construction projects in Iran, including a water tunnel in Ghomroud. As the pictures on Aker's Iranian website show, the Islamic Revolutionary Guard Corps has posted its insignia at the entrance to that project, indicating its involvement. The IRGC, by way of background, is deeply involved in Iran's nuclear and ballistic missile programs, and its brutal repression of the regime's democratic opposition.

Similarly, Danish firm Haldor Topsoe has worked on several refinery projects in Iran. It also provides licensed technology and engineering assistance to Iran. The company's subsidiary, Haldor Topsoe Inc., is based in Houston.

Then there's the Russian firm Gazprom, which produces oil in Iran. Industry publications report that it is in discussions to supply gasoline to Iran in open defiance of U.S. sanctions. Its wholly-owned subsidiary, Gazprom Marketing & Trading, has offices in Houston.

In our own hemisphere, the Brazilian company Petrobras recently concluded several major energy projects in Iran, including drilling operations in the Caspian Sea and the Tusan gas block in the Persian Gulf. Petrobras has elected to keep its doors open in the Islamic Republic, and it also has an office in Houston.

The Venezuela-owned PDVSA, which owns the Houston-based energy giant Citgo, has multiple energy deals in Iran.

East Asian companies have energy deals in Iran, too. The Japanese firm Inpex is currently developing Iran's Azadegan oil field, and has announced that it has no plans to halt these operations, even after the U.S. the European Union, Canada, and Australia have all passed new energy sanctions. The company's American subsidiary, Teikoku Oil Company Ltd., is based in Houston.

The South Korean company Daelim has three offices in Iran and one in Houston, according to its website. It has reportedly won several contracts to help develop Iran's natural gas reserves and upgrade the country's oil refineries. European countries supply a lot of the technology and support Iran needs for its energy business.

Chinese firms Sinopec, CNPC and CNPC subsidiary PetroChina all have offices in Houston. These companies rank among the most active Chinese firms currently doing business in Iran.

And Sasol, a South African firm, is active in Iran's petrochemical production, and has also purchased crude oil from Iran for its refineries. The company's North American subsidiary, Sasol North America, has offices in Houston.

These companies can and should follow the lead of several multinationals with offices in Houston that recently severed ties with Iran. One such company is the Dutch firm LyondellBasell. Another is Australian firm WorleyParsons.

It's obvious that energy companies are a major source of revenue for Texas. It's equally obvious that state legislators have no desire to drive away business. But, all politics are local. Texans should engage these companies privately, in an attempt to convince them to pull out of Iran.

Mark Dubowitz is the executive director of the Foundation for Defense of Democracies, and heads its Iran Energy Project. Jonathan Schanzer is vice president at the Foundation for Defense of Democracies, and a former intelligence analyst for the U.S. Treasury.


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