New Sanctions on I.R. Iran to Target LNG Technology

Times Online

The West intends to use Iran’s planned liquefied natural gas (LNG) industry as part of a new wave of sanctions to punish Tehran and bypass objections at the UN. The move to scupper technology transfer to Iran will be the centrepiece of sanctions imposed in the new year as Tehran continues to reject offers to ease tensions over its nuclear programme. “The Iranians want to set up an LNG industry and they need technology transfer — and we can deny them that,” a senior Western diplomat said. Talks on new sanctions are expected to start after an informal end-of-year deadline set by President Obama for Iranian co-operation. The renewed focus comes after Iran rejected a UN proposal to export 75 per cent of its enriched uranium to be turned into fuel for its medical research reactor in Tehran. That proposal, brokered by the International Atomic Energy Agency, would have bought time for a diplomatic settlement by removing the bulk of Iran’s bombmaking material. In recent weeks Russia and China have been moving closer to agreeing to limited additional international sanctions on Iran but it is unlikely that they will support a UN embargo on LNG technology. They are more likely to back a modest expansion of existing UN asset freezes and travel bans on companies and individuals, as well as tightening sanctions on arms trading.

The Western diplomat said that the US and Europe wanted an asset freeze on a second Iranian bank and another shipping company, as well as some other companies. Because of Russian and Chinese opposition, therefore, Western powers will have to pursue sanctions on the LNG industry outside the UN. The technology, which cools natural gas into a liquid so that it can be transported, is controlled by about a dozen companies in the US, Europe and Japan, so the West is in a position to impose and control an embargo. Iran has the second-largest reserves of natural gas in the world after Russia, but remains a net importer and faces a gas shortage this winter. It has aspirations to become a leading player in the world market by developing the massive South Pars field, about 60 miles offshore in the Persian Gulf. Iran says that it could become the largest gas producer by 2018 with more than a 25 per cent market share. It has no LNG plants at present. Samuel Ciszuk, an analyst at Global Insight in London, said new sanctions would be mainly symbolic because existing US trade sanctions had already frozen Western involvement in LNG development. However, the sanctions would deflate Iranian propaganda about becoming a gas superpower.