EU sanctions on Iran may force closure of BP's Rhum field

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 27 -- European Commission officials said new sanctions against Iran, which take effect Oct. 27, will likely lead to the closure of a Scottish gas field owned 50-50 by BP PLC and Iran.

"The UK authorities have informed the Commission that the Iranian sanctions legislation is likely to cause the closure of this field," said a spokesman for Catherine Ashton, commissioner for foreign affairs.

"It shows that the UK authorities are ready to take the difficult decisions that are necessary to make the sanctions effective," said Ashton’s spokesman.

Britain's foreign office earlier said it was down to individual companies to make sure they comply with the sanctions, which were finalized by European Union foreign ministers in Luxembourg on Oct. 25.

"That is the European Union using its collective weight in the world, absolutely in the right way,” said Britain’s Foreign Sec. William Hague, adding that the EU is working with the US and sending a clear message to Iran that it is important to negotiate on its nuclear program.

"We will ensure that Rhum complies with the regulations," said a BP spokesperson, who also said the firm is awaiting details of the EU legislation when it is published later this week.

Rhum field, which lies 390 km northeast of Scotland, has been jointly developed by BP and Iran’s National Iranian Oil Co. (NIOC) since 2003. In this year’s first half the field produced 6 million cu m/day of gas.

A foreign office spokesman played down the potential effect of the closure of the field, which produces about 1% of the UK’s gas: "We do not anticipate that the sanctions will have any significant impact on UK energy supplies or the UK energy market.”

BP and NIOC began gas production and export from Rhum field in 2005, when it was described as the UK's largest undeveloped gas discovery (OGJ Online, Dec. 27, 2005).

At the time, Iranian officials underlined the importance of Rhum field to their country’s financial position.

"Based on today's international gas market price, the gas deposit is worth around $4 billion," deputy Oil Minister Mohammad Hadi Nejad-Hosseinian told the ISNA students news agency.

Mehdi Mirmoezi, NIOC managing director, told ISNA the joint venture "will boost [NIOC’s] financial situation and will strengthen the government."

EU’s sanctions against Iran, launched in July, block oil and gas investment in the Middle Eastern country, and also aim to hamper its refining and gas capability.

Earlier this month, the US welcomed the withdrawal of Inpex Corp. from Iran's Azadegan oil field project, saying that the Japanese firm’s decision underlines the risks of doing business with the Middle Eastern country (OGJ Online, Oct. 15, 2010).

Previous reports said Japan and Inpex planned to withdraw from the Azadegan project in an effort to avoid the possibility of violating US sanctions (OGJ Online, Sept. 30, 2010).

Contact Eric Watkins at

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