Italy urges gradual Iran oil ban

FT.com -- Mario Monti, Italy’s prime minister, warned on Thursday that his government would only back a ban on European Union oil imports from Iran if the embargo was imposed gradually and excluded billions of euros of oil-related debt owed to Rome-based oil group Eni.

As Iran continues to attack US and EU plans for oil related sanctions on Tehran, European diplomats are confident a ban will be agreed at a meeting of the bloc’s 28 foreign ministers on January 30.

However, Mr Monti signalled EU member states must still agree on critical details relating to any ban on oil imports, most notably whether it should be full or partial and whether it should be imposed immediately or in stages.

In an interview with French daily Le Figaro, Mr Monti highlighted the significance of any ban on the Italian economy, noting that 13 per cent of Italy’s total annual imports of crude come from Iran, leaving it highly exposed to any oil supply shock.

Mr Monti said Italy would be ready to back any new sanctions package if Iran “persists with its policy of nuclear armament”. But he added: “An oil embargo will only be possible if it remains gradual and if there is an exclusion of deliveries that are aimed at reimbursing billions of euros of debt which Iran owes to our national oil company Eni.”

Italy’s insistence that Eni should continue to be paid its oil-related debt has long been known. Last month, Paolo Scaroni, chief executive of Eni, said that Iran owed the company around $2bn. However, Mr Monti’s demand that any ban should be gradual touches on a key aspect of negotiations at the EU. Diplomats say Italy and other states insist on a phased ban so that oil supplies from other states, such as Saudi Arabia, can be guaranteed.

The exact scale of the ban is also being contested. An Italian official told the Financial Times: “As it stands the intention is not to impose a full embargo” but “a meaningful, significant reduction of imports” of oil by the EU from Iran. However, other states, such as the UK and France, are likely to insist on more substantial action.

One factor which may allow the EU to soften its stance is that the Obama administration’s recent law imposing petroleum-related banking sanctions on Iran does not take effect until the end of June this year. Some diplomats believe the EU may seek to align the moment it imposes its own oil ban with US plans.

The EU’s negotiations came as Iran said it was unconcerned about the latest US and European sanctions aimed at forcing it to halt its nuclear work.

Ali Akbar Salehi, Iran’s foreign minister, said Tehran would “weather the storm”, adding: “Iran, with divine assistance, has always been ready to counter such hostile actions and we are not concerned at all about the sanctions. Just like we have weathered the storm in the last 32 years with the help of God and efforts that we make, we will be able to survive this as well.”

Additional reporting by Monavar Khalaj in Tehran

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