PETROVIETNAM STILL NEGOTIATING DETAILS OF IRAN INVESTMENT

UNCLAS HANOI 000711 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ENRG ECON EPET ETTC IR PREL VM SUBJECT: PETROVIETNAM STILL NEGOTIATING DETAILS OF IRAN INVESTMENT REF: A) HANOI 314; B) STATE 59820 ¶1. (SBU) On June 10, POLOFF discussed Ref B points about reports of PetroVietnam's investment in Iran's energy sector with MFA West Asia and Africa Department specialist Nguyen Quynh Phuong. Ms. Phuong said the two sides are still negotiating details of the investment. She characterized the agreement signed in March as "more than a memorandum of understanding, but not a firm contract." According to Phuong, the deal will be scuttled only if the two sides are not able to reach agreement on remaining technical and commercial terms. She was not able to provide an estimated value for the transaction. Phuong also said there has been no further progress on a second Iran project that PetroVietnam is pursuing jointly with Belarus (Ref A). ¶2. (SBU) Phuong emphasized that the GVN always respects UN Security Council resolutions and that PetroVietnam's Iran deal had been structured with attention to compliance with Iran sanctions. The banks and Iranian partners in the transaction were reviewed and selected with an eye to insuring that they are not entities listed in the resolutions. ¶3. (SBU) While acknowledging U.S. concerns that the deal could send a wrong message to the Iranian Government, Phuong pointed out that the GVN would like to maintain friendly relations with Iran. By cooperating in the energy sector, Phuong suggested that the GVN may have an opportunity to influence Iran with regard to other issues. The GVN approach is "to build its bilateral relationship with Iran, rather than to isolate Iran." Phuong said she would pass U.S. concerns about the Iran deal to the MFA leadership for its consideration. ALOISI