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Friday, June 26, 2009

OMV may walk away from Iran

In April 2007, Austrian energy giant OMV signed a letter of intent to enter into a joint venture with Iran to produce liquefied natural gas from Iran's South Pars gas field. The deal was worth €22 billion.

At a shareholders' meeting in May 2008, OMV directors were questioned about the moral propriety of an Austrian company entering into a transaction of this size with a country whose leaders - among other things - denied the Holocaust. The directors arrogantly responded:
OMV spokesman Thomas Huemer told the The Jerusalem Post that "OMV as a company does not have a moral responsibility toward a particular state."
Now, due to the situation in Iran, OMV may walk away from the deal. Suddenly, with dissidents on the verge of open rebellion against the Iranian government and that government committing indiscriminate murder in the streets in response, it may not be profitable for OMV to invest in Iran. Business is business.
Austrian oil company OMV AG has resisted Iranian pressure to push ahead with investment in a gas project and is prepared to be dropped as a partner, rather than invest now, an executive said yesterday.

Helmut Langanger, OMV exploration and production boss, said the political environment and financial framework would have to be right before OMV could proceed with its planned investment in Phase 12 of the giant South Pars offshore gas field.

“On and off they say ‘You should start here by such and such date’ and then we say ‘wait and see until the oil price recovers’,” Langanger said. “If they wanted they could replace us ... They are proceeding with the project on their own without us and they don’t get hampered by us”.


At 4:16 PM, Blogger NormanF said...

Its business. Iran right now is not a good place for multinational businesses to invest and the upshot is sanctions are going to eat away at the regime's ability to buy off the population simply because it can no longer guarantee a lucrative and secure business environment at home. It was never about moral sentiment. Its the Iranian economy, stupid.

At 10:33 AM, Blogger Alpha3958 said...

I think Bruno has captured the essence of Austrians better than anyone else.


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