The Iran-Libya Sanctions Act (ILSA) Page: 4 of 6
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CRS-4
ILSA sanctions on the first project determined to be in violation - a $2 billion2 contract
(signed in September 1997) for Total SA of France and its minority partners, Gazprom of
Russia and Petronas of Malaysia to develop phases 2 and 3 of the 25-phase South Pars gas
field. The Administration announced the waiver on May 18, 1998, citing national interest
grounds (Section 9(c) of ILSA), after the EU pledged to increase cooperation with the
United States on non-proliferation and counter-terrorism. The announcement indicated
that EU firms would likely receive waivers for future projects that were similar. Based in
part on that implicit promise, several EU firms proceeded with projects in Iran. ILSA has
caused firms from Japan, which is not an EU member, to refrain from investing in Iran to
date. However, a Japanese consortium, at Iran's invitation, is negotiating to develop
Iran's large Azadegan oil field.
Since the South Pars case, several projects - all involving Iran, not Libya - have been
formally placed under review for ILSA sanctions, but no determinations have been
announced. The Clinton Administration began informal reviews of several projects in
Libya, but U.S. officials say that foreign investment in Libya is more difficult to assess
because Libya has consistently hosted foreign energy firms; projects there mostly
represent continuations of investments made prior to ILSA's enactment. One such
project is a $5.5 billion gas pipeline from Libya to Sicily sponsored by Italy's ENI/Agip
Gas. Other Libya projects appear to fall under the trigger investment threshold. One
project that has attracted congressional attention is a reported effort by a German firm,
Wintershall, to acquire exploration rights in Libyan fields owned by U.S. firms. According
to the Clinton Administration's December 2000 report to Congress on ILSA and Clinton
Administrations statements, the Iran projects under review include:
A February 1999 award to France's Elf Aquitaine (now merged with
Totalfina) and Italy's ENI to develop the Doroud oil field. The estimated
value of the investment is $1 billion. Work is under way.
A project, run by Elf Aquitaine and Canada's Bow Valley, to develop the
Balal oil field. The project had foundered for lack of financing until Elf's
decision to join it in April 1999. The estimated value is $300 million.
Work is under way.
A November 1999 contract for Royal Dutch/Shell (U.K. and the
Netherlands) to develop the Soroush and Nowruz oil fields. The
estimated value is $800 million. Work has begun.A July 2000 award to ENI to develop phases 4 and 5 of South Pars. The
estimated value is $3.8 billion. Work will begin in June 2001.
An exploration contract for Norway's Norsk Hydro to develop the
Anaran oil field, signed in April 2000. The estimated value is unknown.
Work is expected to begin in June 2001.2 Dollar figures for energy investment contracts with Iran represent public estimates of the amounts
investing firms are expected to spend during the life of the project, which might in some cases be
several decades.
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Katzman, Kenneth. The Iran-Libya Sanctions Act (ILSA), report, July 20, 2001; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metacrs1840/m1/4/?q=%22law%22: accessed May 5, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.