Washington (Platts)--31Jul2009

The US Senate has adopted a measure that would prohibit companies that
sell gasoline and other refined products to Iran from contracting to fill the
Strategic Petroleum Reserve.
The late Wednesday voice vote on the amendment tacked it onto the annual
Department of Energy funding bill.
The amendment, which was sponsored by Republicans Susan Collins of Maine
and Jon Kyl of Arizona, would require companies to choose between supplying
Iran with gasoline and supplying the US Strategic Petroleum Reserve.
At least three companies fit that bill, Glencore, Shell Trading and
Vitol, according to the Foundation for Defense of Democracies. In January, the
three were named by DOE as suppliers to the SPR for deliveries this year.
While it could not be immediately confirmed whether any of the three currently
sell refined products to Iran, all of them are known active traders in oil
markets throughout the world.
Despite its vast petroleum resources, Iran is heavily dependent on
imports for its transportation fuels needs, and some pro-democracy advocates
say the US can use this dependence as leverage.
"Congress has embraced the idea of using Iran's economic Achilles'
Heel -- its heavy dependence on gasoline imports for about 40% of its domestic
needs -- to pressure the regime into giving up its illegal nuclear weapons
program," Foundation for Defense of Democracies Executive Director Mark
Dubowitz said in a statement following the spending bill vote.
"This approach has attracted broad bipartisan support and should be
brought to bear if Iran does not respond favorably to good-faith efforts to
negotiate the end of its nuclear weapons program by the time of the G-20
Summit in September."
The language was attached to the Senate Energy and Water Appropriations
bill, which would (H.R.3183) provide $27.4 billion for the DOE. This number is
$1.1 billion below what the president requested for the agency, and includes
$259.1 million for the Strategic Petroleum Reserve, including an additional
$30 million above the administration's request for construction of a new
storage site in Richton, Mississippi.
In common with the companion House's bill, the Senate measure provides
the requested $23.6 million for the Naval Petroleum and Oil Shale Reserves.
--Jean Chemnick, jean_chemnick@platts.com
--Katharine Fraser, katharine_fraser@platts.com