Under the Shell deal they will be restored, fitted with the latest technology and made far more productive to tap expected reserves of 400 million and 700 million. The oil will go to Iran in a buy-back scheme,

boosting its export capacity, while cost repayment and profits go to Shell."We will bring to Iran financial resources, technology and a century of experience in the oil and gas business," said Phil Watts, director of Royal Dutch Shell, "to ensure that these off-shore fields are developed speedily."The most significant aspect of this deal is that it constitutes an act by Shell of defiance of the U.S. sanctions policy against Iran, decreed in the 1996 U.S. Iran-Libya Sanctions Act.

This has been devised to stop investments of over $20 million by foreign companies in Iran's energy sector (particularly oil and gas) with the threat of punitive action by U.S. courts against any interests that such companies may have in the U.S. Shell has extensive interests in the United States.Immediately after announcement of the Shell deal with Iran the U.S. state department issued a statement saying that it was starting an inquiry into whether Shell had breached the Sanctions Act. Such an inquiry could take months, while Shell proceeds with its investment of 40 times beyond the U.S. sanctions limit.Action against Shell is no more likely than it was against the 1997 deal reached by France's Elf Aquitaine and Canada's Bow Valley Energy to jointly invest $300 million in another Iranian off-shore oil field, or against France's Total, which contracted in the same year for a $2 billion gas exploration in Iran.The Clinton administration backed away from threatened action at the time when France warned of readiness to retaliate.Iran is hardly an area where the big multinational oil companies can long be kept away from investment opportunities.Iranian oil reserves are estimated at 93 billion barrels, 9 percent of the world's total. At present 40 major oil, gas, refinery, pipeline and other projects are offered for bidding by western companies which have flocked to Teheran to take part, including major U.S.. oil companies that urge relaxation of the sanctions policy.

It was not coincidental that Iran signed the major deal with Shell at the same time that another signing ceremony took place in Istanbul, Turkey.There, where a summit meeting was being held of the Organization for Security and Cooperation in Europe (OSCE), Bill Clinton used the occasion to preside over the signing of an accord by leaders of Azerbaijan, Turkmenistan, Kazakhstan, Georgia and Turkey.They agreed on terms for commercial investment in an oil pipeline proposed to run from Baku in Azerbaijan across Georgia and Turkey to Turkey's Mediterranean port of Ceyhan. Also tentatively approved was a gas pipeline from Turkmenistan under the Caspian Sea to Turkey.

The oil pipeline scheme in particular has been a key project of U.S. strategic planners in Washington who have been engaged in a massive pressure campaign to get the agreement of both the political leaders of the region and major oil companies.The presidents of Azerbaijan, Georgia, Turkmenistan and Kazakhstan have been invited to Washington for red carpet treatment and President Clinton's special adviser on Caspian energy resources, John Wolf, has toured the region continually with a high-powered salespitch."This is much more than just an oil pipeline," Wolf said. "It's a contribution to the strategic vision of a new European cooperation, and an important part of the economic and political prospects of the region."

It is, in fact, part of an attempted strategic shift by U.S. imperialism away from dependence on the oil of the Middle east, of the Gulf region, to the rich oil and gas deposits of the Caspian basin, to the Middle Asian region. Such a shift has broader aims: to isolate Iran on one hand and on the other hand to draw the former Soviet republics and Middle Asia away from their long-standing ties with Russia and into the U.S. orbit.However, signing a piece of paper in Istanbul does not move oil from Baku to Ceyhan. The pipeline project has enormous uncertainties.The oil companies have been skeptical about cost and general feasibility. The 1,080 mile pipeline would cost around $3 billion at low estimate, is certain to run far beyond that and financing has not been tried.

As for feasibility, the Azerbaijan International Operating Consortium (AIOC), which extracts oil from the Azerbaijan sector of the Caspian Sea and would have to be the main operator of a Baku-Ceyhan pipeline, has had powerful arguments against that project.The AIOC said that to be economically viable and offset its cost the proposed pipeline would have to carry one million barrels of oil per day. The Azerbaijan fields produce only 100,000 barrels per day.At present, the AIOC ships the oil through an existing pipeline from Baku to the Georgian port of Supsa on the Black Sea.It handled up to 130,000 barrels a day, which could be increased fourfold, according to the AIOC, by expanding the pipeline at a fraction of the Baku-Ceyhan cost.

The Baku-Supsa route does bypass Russia, a principal U.S. aim, but it also freezes out Turkey, which the U.S. seeks to build up as a key regional ally. Also it would confine Caspian oil routes to the Caucasus, a Russian sphere.Another Caspian pipeline indeed runs from Baku across Russian Federation territory to Novorossiysk on the Black Sea. It passes through Chechnya. Russia plans to divert the pipeline around Chechnya. Its military crushing of rebellion in Chechnya (which the U.S. condemns) is a phase of an emerging struggle for control of the key Caucuses sector of the Caspian basin and its oil.