U.S. official due in KL, Jakarta over Iran deals

U.S. official due in KL, Jakarta over Iran deals

KUALA LUMPUR (Reuters): A senior State Department official will visit Malaysia this week to review an investment by state oil company Petronas in Iran that could trigger U.S. sanctions, a U.S. official said yesterday.

Deputy Assistant Secretary for Energy, Sanctions and Commodities William Ramsay was due to arrive in Kuala Lumpur on Wednesday for two days of talks, a U.S. embassy official said.

Undersecretary of State Stuart Eizenstat said last week that Ramsay would try to determine if the financial crisis in Asia had affected Petronas's plans to participate in a US$2 billion project in Iran's South Pars offshore gas field.

"It is another opportunity for him (Ramsay) to touch base with officials here," the U.S. official said, adding that Ramsay's schedule had not yet been firmly established.

Washington says the gas deal involving Petroliam Nasional Bhd (Petronas), France's Total SA and Russia's Gazprom and signed last September violates the Iran and Libya Sanctions Act of 1996.

The law requires the president to impose sanctions on any foreign company that invests $20 million or more a year in Iran's oil and gas sector.

U.S. criticism of the deal in Iran has sparked outrage in Malaysia.

The State Department has also been reviewing whether a separate $180 million deal in Iran's energy sector between Indonesia's Bakrie Minorak Petroleum and Canada's Bow Valley Energy Ltd violates the law.

Ramsay was expected to visit Jakarta during his trip to the region, the U.S. diplomat said.

Last November, the lower house of parliament overwhelmingly approved a motion criticizing the U.S. investigation into Petronas's investment in Iran.

Petronas chief executive Hassan Marican said last month that his firm would not withdraw from the investment which is part of its strategy to become a global company.

The chairman of the House International Relations Committee, Rep Benjamin Gilman, a New York Republican, last week criticized the administration for taking too long to reach a decision.

Gilman told President Bill Clinton that his administration had three weeks to decide whether foreign companies had violated the U.S. law, but the State Department rejected the deadline.

State Department spokesman James Rubin said on Friday that the administration was reviewing whether the Asian economic crisis could cause Petronas and Bakrie Minorak Petroleum to abandon plans their plans to invest in Iran.

Eizenstat said the administration expected to make a decision "sometime in the near future".