Russia's Second Largest Oil Company Halts Projects Related to Iran

Reuters reports that Lukoil, Russia's second largest oil company, announced on Tuesday, May 29, that due to concerns arising from the return of U.S. sanctions, it currently does not intend to pursue projects related to Iran. A Lukoil official stated during a conference call, "Given recent events, it is probably too early to say what our plans regarding Iran are. At this point, we have effectively halted everything." Previously, reports had emerged regarding the assessment of Lukoil's activities in Iran. Last week, Platts, an energy and transportation news portal, quoted the CEO of the Russian company as saying they are reassessing the risk of their activities in Iran. Lukoil, along with Maersk of Denmark and Indonesia's state oil and gas company, had signed a memorandum for cooperation in the development of the Netfi Ab-Timor field. It has been reported that Lukoil and Pertamina of Indonesia are also studying the Mansouri field. The Mansouri and Ab-Timor oil fields are located in southwestern Iran near Ahvaz. A month ago, the Russian state news agency Sputnik reported that Lukoil would sign a contract with Iran for the "development of the Mansouri and Changuleh oil fields." In recent days, several companies, mainly European, have announced that they are halting their activities in Iran due to the risks posed by the return of U.S. sanctions. Italian company Danieli, which signed an $1.8 billion contract with Iran following the nuclear agreement, French gas and energy company Engie, Maersk Line, the largest shipping company, Siemens, a German equipment and technology company, are among those that have announced the suspension of their activities in recent weeks. Donald Trump, the President of the United States, withdrew from the nuclear deal despite opposition from Europe, Russia, and China, other parties to the nuclear agreement with Iran, after Iran refused to agree to renegotiate the JCPOA. Mr. Trump claims that the nuclear deal during Barack Obama's presidency is one of the "worst deals" he has seen and does not guarantee the security of the United States. Europe, China, and Russia have emphasized their commitment to the JCPOA, although it is unclear how feasible it is to maintain this agreement with the return of U.S. sanctions. The U.S. Treasury Department has announced that sanctions related to Iran's nuclear program, which were extended until May 11, will be reimposed in the next three to six months. Mike Pompeo, the U.S. Secretary of State, also stated at the end of May that Washington would impose the "toughest sanctions in history" against Iran and that if the Iranian government "does not change its behavior," the pressure of sanctions will increase. Iran has stated that it is not willing to negotiate on issues such as its missile program. Tehran has rejected discussions on regional issues, except for the Yemen crisis, and is currently engaged in discussions on this matter with European parties.