BP's Other Oil Crisis

Why is the scourge of the Gulf Coast still doing business in Iran?

In light of the catastrophic spill off the Gulf Coast, BP has become one of the world’s most abhorred companies. While the most recent calamity may be an isolated lapse in judgment and preparedness, this is not the first time that BP has found itself in a high-profile scandal. From the current eco-crisis to disregard for international security, foes accuse BP of placing revenue above all potential cost factors. Following in the footsteps of past offenders like General Electric (GE) and Halliburton, BP is actively engaged in business and trade with Iran, despite the impending threats the nation poses to international peace and stability.

BP’s continued support for Iran adds the energy giant to the ranks of international companies that have defied the international community’s efforts to hold the nuclear-seeking mullahs to account by continuing to do business in the country.

To be sure, doing business with Iran is not necessarily illegal. Current and proposed sanctions do not prevent companies from engaging in oil sales. But with business practices not officially restricted, energy companies like BP continue what some government officials and policy experts see as morally-bankrupt business practices. The company chooses its current policy of Iranian engagement amid the country’s non-compliance with requests by the United Nations and Western powers to contain nuclear ambitions, not to mention increasing evidence that Iran has heavily assisted Iraqi insurgents. Despite these issues, BP appears unwilling to sever its contracts with Iran.

Such lax regulations have some wondering why the United States and international allies refrain from more restrictive sanctions. According to the Wall Street Journal, sanctions on Iranian oil exports would likely increase world-wide costs, which, in turn, would potentially lead to an increase in U.S. gasoline prices well beyond their currently elevated status. Furthermore, officials suspect that an oil embargo would create economic instability for U.S. allies who are already experiencing fiscal woes. As a result, the WSJ reports that “…companies like Shell and BP PLC continue to do a brisk business buying Iranian oil products.”

When asked about companies engaging in business with Iran, Mark Ware of Vitol Group (energy-training company) said, “Everyone buys from the Iranians—governments, states, other companies. It’s not subject to any legislation,” serving as yet another prime example of the “because we can” mentality that is likely driving BP’s current policy. Predictably, representatives from BP have been unwilling to speak to the press about the company’s Iranian business connections.

Despite very obvious ethical contradictions, BP claims to embrace honesty and integrity. According to the company’s web site, “As one of the world’s leading companies, we have a responsibility to set high standards: to be, and be seen to be, a business which is committed to integrity.” BP goes on to state that it can best be characterized by four key words – progressive, responsible, innovative and performance-driven. Ironically, recent developments show BP at a loss in each key area, as gallons of oil continue to siphon into Gulf waters. Furthermore, ongoing business relations with a rogue nation do little to validate BP’s self-professed zeal for incorruptibility.

When it comes to choosing whether to engage in Iranian business interests, the ethical answer is explicit, yet BP has been inconsistent and indecisive in its approach. In 2005, BP’s Chief Executive John Browne said the following regarding the company’s business relations with Iran: “To do business with Iran at the moment would be offensive to the United States, and therefore against BP’s interests. We’re very heavily influenced by our American position.” While this stance appears firmly solidified, Browne took a very different tone in 2001. According to Business Week, at that time Browne was growing impatient with the U.S. government’s strained relations with Iran. According to the article, “Sources close to BP say Browne recently told Vice-President Dick Cheney, who was reviewing U.S. energy policy, that BP had been more than generous in waiting for the situation between the U.S. and Iran to improve.”

According to a 2005 Guardian article, prior to the 911 attacks BP was looking to invest in Iran. However, the attacks made such a venture less viable, as Browne said, “Right now it is impractical for BP because 40% of BP is in the US and we are the largest producer of oil and gas in the US. Politically Iran is not a flyer. One day I hope it is.” Here again, the concern is rooted in politics and the explanation is devoid of any allegiance to the nations in which BP primarily operates. Nowhere does BP’s rhetoric match the company’s penchant for truth and integrity. The focus was on BP’s bottom line.

In 2010, The New York Times reported on 74 companies who have done business with Iran, while receiving monies from the U.S. government. BP is listed as an “active” Iranian business partner, admitting to providing Iran with gasoline until 2008 – just three years after the company made public claims about its plans to cease working with Iran.  During this time, BP also admits to “…operating two fields and a pipeline” outside the rogue nation; the National Iranian Oil Company had a stake in this property. Currently, the company purchases “small quantities of crude oil” from Iran.

While BP is not necessarily violating the law by economically engaging Iran, U.S. leaders and policy experts fear that companies who ignore Iranian noncompliance with the UN and Western powers are only emboldening the nation’s leaders. Between the Gulf oil spill, which will likely have lasting environmental impact, and BP’s current Iranian policy, the company will likely remain under fire for months to come.