Department it will end all its work in Iran after its current contracts are finished—but it said that only after negotiating a raft of new contracts with Iran, the Boston Globe reported Friday. The new contracts will likely keep Schlumberger going in Iran until 2013—and maybe beyond, the Globe reported. A spokesman for Schlumberger Ltd. confirmed to the Globe that the firm promised the US State Department it would pull out of Iran when its current contracts are complete. That would be a major victory for the US given that Schlumberger is the sole major international oil services company still known to be operating in Iran now that Halliburton and others have withdrawn. But the Globe said it had obtained internal company documents showing that Schlumberger — which is already under investigation for possible sanctions violations — signed contracts worth hundreds of millions of dollars that it intends to complete before it exits. Those contracts will keep the company working in Iran until least 2013, a delay the Globe said has angered some US officials. Internal documents — given to the Globe by a worker who accuses Schlumberger of sidestepping the embargo on Iran — illustrate how the company adapted to ever-increasing sanctions after its competitors were forced out. Sanctions banning Americans from helping Iran’s oil sector have been in place since 1995. But Schlumberger was able to keep working in Iran because it is not legally an American company. It is registered in the Netherlands Antilles, even though its headquarters are in Texas and France. As concern over Iran’s nuclear program grew, the European Union issued its own ban on transferring oil technology to Iran this summer. Europe’s increasing support for sanctions was the final straw that persuaded Schlumberger to leave, said Rod Nelson, the company’s vice president of communications.
“It caused us to reevaluate whether we could keep operating,’’ he said. “Our decision means that if nothing changes we will ultimately end operations in Iran.’’ Schlumberger was founded in 1919 by two French brothers who invented machines that could detect oil under the ground. The company has worked in Iran since the 1940s. In the 1980s, Schlumberger had competition in Iran: Texasbased Halliburton, Baker Hughes, and Weatherford. But after President Clinton banned US firms from working in Iran, they were eventually forced to withdraw. After Clinton issued another order in 1995, this one banning US equipment from being sent to Iran, Schlumberger sent US goods to its Jebel Ali facility in Dubai and then reexported them to Iran, the Globe reported. Such shipments are considered legal, as long as Schlumberger’s Iranian employees did not request that American goods be ordered on their behalf.
As the United States and Europe stepped up the pressure on Iran, Schlumberger shifted some of its manufacturing to China, which had no embargo. But the company still struggled to get some equipment it needed. For instance, in 2007, the European Union banned the export of safety badges that detect radiation from drilling machines. For a year, the Globe said, Schlumberger’s wireline manager in Iran continued to purchase the badges from the France-based subsidiary of Landauer, an Illinois manufacturer, according to an invoice. But in January of 2009, a Schlumberger compliance officer ordered them to stop. “This is a clear violation to EU sanction rules,’’ he wrote in an e-mail. At first, Schlumberger’s manager in Iran could not find a replacement and responded that he had “no other choice to continue using Landauer.’’ But eventually, he found a new supplier in Asia, illustrating how Asian companies are stepping in to replace European and American firms. In February 2009, executives flew to Washington and pledged not to undertake any new work in Iran. But, according to the Globe, over the next 10 months, Schlumberger began work on at least 12 fresh contracts in Iran worth more than $400 million, including a $277 million contract in Iran’s South Pars gasfield that doesn’t expire until 2013, according to the documents. Nelson acknowledged that the company signed some contracts after February 2009, but said all of those deals had been negotiated months before, and in some cases more than a year before. He said the company’s promise to pull out of Iran remains in place. “We made it clear to the State Department that we would honor all prior commitments, including bids made prior to the 2009 meeting,’’ he said. Nelson said he could not give a final date for Schlum-berger’s departure because some contracts give Iranians the right to renew. But he said the company has passed up the chance to bid on at least 100 new contracts, hinting at how much work Iran still requires foreigners to fulfill. Richard Modesette, a former Commerce Department special agent who investigated sanctions violations, said Schlumberger’s departure could be a major setback for Iran’s oil industry. “I’m really curious as to who the Iranians are going to have to complete their wells for them now,’’ he told the Globe.
