Iran threatens economic backlash over IAEA vote

By FT reporters
Published: September 27 2005 10:51 | Last updated: September 27 2005 10:51

Iran said on Tuesday it would reconsider economic ties with countries that voted against it at last week's board meeting of the UN atomic watchdog.

Hamid Reza Asefi, foreign ministry spokesman, said Tehran was particularly surprised by the vote against it from India, which has recently agreed to to import 5m metric tons of liquefied natural gas annually from Iran via a gas pipeline project linking the two countries.

Tehran in June signed a $22bn liquefied natural gas deal with India, under which a consortium will purchase 5m tonnes of LNG a year for 25 years from 2010.

India has also been seeking to pipe gas overland from Iran in a $7bn project that will cross Pakistan.

Mr Asefi said India's vote at the International Atomic Energy Agency "came as a great surprise to us", adding: "We will reconsider our economic co-operation with those countries that voted against us."

India's oil minister said on Tuesday, however, that he did not believe the vote would "adversely impact the enormous progress we have made in the proposed gas pipeline project". Mani Shankar Aiyar told reporters India stood "firmly committed in bringing the Iran-Pakistan-India pipeline into fruition".

Mr Asefi's remarks follow a warning a series of warnings that the new government may review some of its economic ties in the light of political considerations.

Ali Larijani, secretary of the Supreme National Security Council (SNSC), last week explicitly linked oil and gas contracts to the fate of nuclear talks with the EU-3 Britain, France and Germany, suggesting that European pressure over Iran's nuclear programme was putting at risk multi-billion dollar energy deals with oil majors, including Total and Royal Dutch Shell.

And in a clear warning to the EU, Mahmoud Ahmadi-Nejad, Iran's president, last month told parliament "economic ties are not irrelevant to political ties" especially with "hostile" countries who "fail to recognise Iran's legitimate rights".

Iran has been developing gas links with China and India, who have proved more sympathetic than the Europeans to Iran's nuclear programme. Tehran last year signed a 30-year, $70bn LNG deal with China's Sinopec.

Japan, which also voted against Iran, is pursuing a giant investment project at Azadegan in southwest Iran, hailed as one of the world's largest untapped oilfields.