The number of foreign firms investing in Iran’s energy sector has fallen to less than half the number in 2010, according to a US government report.

There were 16 foreign firms operating in Iran’s oil, gas and petrochemical sectors between 1 January 2010 and 30 May 2011, down from 41 firms in 2010, says the US’ Government Accountability Office in a 3 August report.

Many of the firms that pulled out of Iran in the past year reported sanctions from the United States and other organisations led them to cease activity, the US report said.

Twenty of the 41 firms listed in the GAO’s 2010 report declared that they have withdrawn or are withdrawing from commercial activity in Iran’s energy sector.

“The companies that withdrew from Iran cited several reasons for ceasing activity, including sanctions imposed by the US government, as well as other international organisations, and the difficulty associated with conducting business with Iran”, says the report.

However, the Accountability Office notes that Indian and Chinese state oil companies have increased interest in the construction of Iranian refineries, and Iran is looking these countries to increase development of oil exploration and production.

The United States has imposed sanctions to prevent US companies from investing in energy programmes in Iran. Additional sanctions exist for foreign firms that invest more than $20m.

Firms have come under increasing pressure to close business with Iran or face losing contracts in the US. Of the seven companies active in Iran between 2005-09 while holding US government contracts, five have now left the country.

The two remaining firms, South Korea’s Daelim Industrial and Hyundai Heavy Industries hold US government contracts with total obligated funds of more than $4m (MEED 17:12:10).

The Accountability Office lists the following firms with reported commercial activity in Iran’s oil, gas and petrochemical sectors:

• Belarusneft  (Belarus) – exploration and production
• China National Offshore Oil Corporation (China) – natural gas
• China National Petroleum Corporation (China) – Oil exploration and production, natural gas
• Daelim – Natural gas
• Edison (Italy) – Oil exploration and production
• Hyundai Heavy Industries – Refining
• INA (Croatia) – Oil exploration and production, natural gas
• Indian Oil Corporation (India) – Natural gas
• Oil and Natural Gas Corporation (India) – Oil exploration and production, natural gas
• Oil India (India) – Natural gas
• OMV (Austria) – Natural gas
• ONGC Videsh (India) – Natural gas
• Petroleos de Venezuela (Venezuela) – Natural gas
• Sasaol (South Africa) – Petrochemicals
• Sinopec (China) - Oil exploration and production, refining
• Sonangol (Angola) – Natural gas