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French, Italian Firms in Iran Deal

March 1, 1999

TEHRAN, Iran (AP) _ Elf Aquitaine of France and Agip of Italy signed a $540 million energy deal with Iran on Monday to boost oil production despite U.S. sanctions on investments in the Islamic Republic.

The deal with the state-run National Iranian Oil Co. for the Dorood oil and gas field is expected to increase Iran’s output capacity, the European consortium said in a statement.

Iran’s now produces nearly 4 million barrels of oil a day. The Dorood deal is expected to boost that amount by more than 100,000 barrels daily.

The United States has strongly discouraged such investment in a nation it describes as a sponsor of terrorism. The U.S. Congress has passed the Iran-Libya Sanctions Act, threatening to punish companies investing more than $20 million in Iran or $40 million in Libya.

In 1997, the French oil company Total signed a $2 billion deal with Iran to develop natural gas reserves, along with Gazprom, a Russian petroleum company, and Petronas, a Malaysian company. The United States said the following year that it would waive sanctions in that case.

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