BP (NYSE:BP) Shutting Down Rhum Gas Field on Iran Sanctions

With the British government unwilling to clarify the situation resulting from the sanctions by Europe on Iran because of their nuclear program, BP said they're going to shut down their Rhum gas field in the North sea to be sure they're in compliance with the decision.

The Rhum field is a 50/50 venture with Iranian Oil Co. U.K. Ltd., a unit of Naftiran Intertrade Co., based in Tehran, Iran.

Matt Taylor, a spokesman for BP based in Aberdeen, Scotland, said, “Pending clarification from the government and to ensure we comply with the required notification period in the regulations, preparations to suspend production are underway. From the middle of next week there will be no production from Rhum.”

The purpose of the sanctions, according to the EU, is to keep the use of European technology from aiding the nuclear program of Iran.

Once the British government clarifies the rules of the sanctions, BP will review the shutdown.

In the short term and in light of the huge gas supply, the shutdown won't hurt the UK, as the Rhum field currently supplies about 2 percent of gas demand for winters in the UK.

The implication of all of these seems to say the EU didn't thoroughly think through the consequences of this, or Britain is strongly opposing the shutdown and is negotiating to allow the Rhum field to be exempt from sanctions.

BP (NYSE:BP) May Have to Shutter Gas Field because of Sanctions on Iran

Sanctions from the European Union on Iran because of their continuing nuclear program will probably result in BP (NYSE:BP) having to shut their gas field located of of Scotland because of their partnership with Tehran in the project.

The EU approved sanctions on Iran on Monday, which target the energy sector of the country, which is vital to the economy of Iran.

An EU spokesman said, "The UK authorities have informed the (European) Commission that the Iranian sanctions legislation is likely to cause the closure of this field."

The sanctions have been put in place in order to bring Iran back to the bargaining table over the enrichment of uranium, said EU leaders.

"This is an intended effect of the legislation and it shows that the UK authorities are ready to take the difficult decisions that are necessary to make the sanctions effective," added the EU spokesman.

Tehran has denied the accusation from the West that their nuclear program is being used to build an atomic bomb rather than the proposed energy program they assert it is.

The gas field to be closed is the Ruhm field.