The 1996 law threatens sanctions on US and internal firms which invest more than US$40 million in Iran’s oil and gas sector and US federal law prohibits any US firms from trading directly with Iran. However, foreign subsidiaries are allowed to do so provided the unit is truly independent of the US parent.

According to a report in the Shargh newspaper, which cited an unidentified Pars Oil Gas Co official, the deal was allegedly worth US$310 million. It said Halliburton PSL did not directly sign the contract but had offered its services via its Iranian partner.

Furthermore, a report in Payvand indicated Oriental Kish would hold a 58% stake with the balance held “in the form of foreign investment” and development of the two phases would include onshore and offshore sections with initial phase of operations slated for early 2007.

Once fully developed, the project is expected to produce some 50 million cubic metres of treated natural gas per day for “domestic use”, 80,000 bpd of gas liquids for export, and a million tons of ethane for Iran’s petrochemical industry, according to the Payvand report.

Another report, in the Houston Chronicle, indicated Halliburton PSL’s role was a “subcontractor working for Oriental Kish”. According to Halliburton spokesperson Wendy Hall, Oriental was the firm which won the contract and not Halliburton itself.

“We have not signed a contract for this. Halliburton’s business is clearly permissible under applicable US laws and regulations,” said Hall.

“These entities and activities are staffed and managed by non-US personnel. Halliburton has no ownership stake in Oriental Kish and we certainly did not form it,” she added.