Lula: Petrobras Will Continue to Invest in Iran

RIO DE JANEIRO Apr 02, 2007 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PETR4.BR), or Petrobras, will continue to invest in Iran despite U.S. concerns, President Luiz Inacio Lula da Silva told U.S. President George W. Bush, the Valor newspaper said Monday.

Lula, speaking Saturday at a visit to Camp David, Md., said Iran is an "important trading partner" for Brazil that bought goods worth more than $1 billion a year from Brazil, while it sold the Latin American country almost nothing, the newspaper said.

"I know that there are political disagreements between Iran and other countries," Lula is quoted as saying. "With Brazil, there is no political disagreement and we will continue to work together in (areas) of interest for Brazil."

Brazil's government owns 60% of Petrobras' voting shares and has a final say in its investment decisions.

Clifford Sobel, U.S. ambassador to Brazil, recently had met Petrobras Chief Executive Sergio Gabrielli to discuss U.N. sanctions on Iran.

"U.S. policy is very clear. We think foreign investment in the petroleum and gas sectors in Iran is contrary to the international interest of pressuring the Iranian regime to ... suspend its enrichment-related and reprocessing activities," the embassy said in a statement sent to Dow Jones Newswires late Friday.

Bush Saturday said while United Nations sanctions against Iran didn't forbid Petrobras investments, countries such as Brazil should be careful in how to deal with Iran, which is transforming itself into a "great threat to world peace," Valor reported.

Petrobras Friday said it had no comment on the issue.

Iran has the world's third-largest oil reserves and second-largest natural gas reserves. But the country's standoff with the U.S. and its allies over the Islamic republic's nuclear program and anti-western rhetoric from President Mahmoud Ahmadinejad have intensified nervousness among foreign firms about investing there.

Iran has also been holding 15 U.K. sailors and marines it detained last week in the Persian Gulf.

Petrobras will sign a $470 million contract with Iran to develop Caspian Sea oil reserves, the Iranian Oil Ministry's information network, Shana, said on its Web site in early March.

Petrobras will drill three wells in blocks 06 and 29 in the Iranian section of the Caspian Sea, Seyed Mahmoud Mohades, director of exploration at the National Iranian Oil Co., was quoted as saying on Shana.

Petrobras, however, so far hasn't confirmed the contract and only says it is in talks with Iran on Caspian Sea projects.

Petrobras and Spanish energy firm Repsol-YPF (REP) also won a tender for exploration at the Tosan Block in the Persian Gulf, Shana had said. The two companies plan to invest $35 million for exploration drilling at Tosan, Valor said.

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