Oil Conglomerate Shell in Talks to Build Gas Pipeline in Iran

The British-Dutch energy conglomerate Shell is negotiating to build a $2.5-billion gas pipeline across northern Iran, the second multibillion-dollar project involving a European oil company in a huge energy deal involving the Tehran regime, according to diplomatic sources.

The project would carry natural gas from the former Soviet republic of Turkmenistan to Turkey and Western Europe, and would be a breakthrough in efforts to export the vast resources of the Caspian Sea region. After a Sept. 28 announcement by the French company Total that it planned to invest $2 billion in Iran’s offshore gas fields, the deal would be a further challenge to the Clinton administration’s attempts to isolate Iran.

However, the administration decided last July that the trans-Iranian gas pipeline would not be a direct violation of a U.S. trade law mandating sanctions against companies investing more than $20 million a year in Iran’s energy sector because the project is designed to involve only Turkmenian gas in transit to Turkey, rather than Iranian production.

Last week, Turkmenian Foreign Minister Boris Shikhmuradov received what he described in an interview as a “greenish” light for the pipeline project during meetings in Washington with Deputy Secretary of State Strobe Talbott and Undersecretary of State for Business and Economic Affairs Stuart E. Eizenstat.

“We would like this greenish signal to become really green,” Shikhmuradov added.

In response to the announcement last month by Total, the administration is holding talks with European governments to explore ways of avoiding a bruising confrontation over U.S. sanctions called for by the 1996 Iran-Libya Sanctions Act, which the administration endorsed.

But there are mounting signs that the administration’s policy, which is aimed at denying Tehran funds to support international terrorism and develop weapons of mass destruction, is unraveling under pressure to export the oil and gas wealth of the Caspian Sea countries.