THE Islamic Republic of Iran has few friends in the United States.
When President Clinton imposed full economic sanctions on Iran in May, Congress offered wide support. But among the biggest losers have been American oil companies, which have been forced to watch as European and Asian firms snapped up lucrative trade and investment opportunities in Iran.
In mid-November, representatives from 40 non-American firms traveled to Tehran to hear the Iranian government announce $6 billion worth of investment contracts in the oil sector with guaranteed returns of up to 30 percent. For the first time since the 1978-79 Islamic revolution, Iran is preparing for major foreign involvement in its energy sector, and US firms are not in the running.
''The projects presented at this conference are some of the key oil and gas projects of our country,'' Iranian oil minister Gholamreza Aghazadeh, said at the Tehran announcement.
The US government banned the import of Iranian oil in 1987, but several American companies continued to buy Iran's oil for resale to customers in Latin America and the Far East. In 1994, for example, Exxon Corp., Texaco Inc., and Mobil Corp. together bought nearly $3.5 billion worth of Iranian crude oil.
In March, a US oil firm, Conoco Inc., signed a pathbreaking $600 million deal to develop two of Iran's offshore oil fields in the Persian Gulf. Under pressure from Republicans, Mr. Clinton scuttled the agreement and later banned all US-Iran economic ties.
Meanwhile, the French firm Total S.A. snapped up Conoco's contract. Total agreed to develop Iran's Sirri A and E fields, which the firm estimates will yield 120,000 barrels per day (b.p.d.) of crude oil within three years, together with substantial volumes of natural gas. This and other recent projects constitute a major boon to Iran, say Iranian officials.
Tehran has yet to emerge from a debt repayment crisis which saw its access to foreign money dry up in 1994, while rampant inflation and import cuts have led to virulent criticism of the regime at home. Despite Iran's attempts to diversify its economy, crude-oil exports provide almost two-thirds of the Iranian government's revenue.
''The impact of these projects will be great,'' says Seyed Mehdi Hosseini, exploration director at the National Iranian Oil Company (NIOC). ''The biggest increase in production capacity will come in natural gas.'' Iran has the fourth-largest oil reserves in the Middle East. But it has had difficulty maintaining production levels over the last two years. Industry experts say average output has often dropped below the 3.6 million b.p.d. ceiling imposed on Iran by the Organization of Petroleum Exporting Countries, the producers' cartel.
The Iranian government wants to increase sustainable output capacity to 4 million b.p.d. by the end of the decade. But many existing onshore oil fields are aging; Iran needs foreign expertise to boost output through ''enhanced recovery techniques'' onshore and to develop its offshore oil and gas fields in the waters of the Persian Gulf.
''We already have the technology in Iran to develop onshore fields,'' comments NIOC's Mr. Hosseini. ''We don't need any help there. But we do need help to develop some of the deep-water fields in the Persian Gulf and the Caspian Sea.''
Foreign involvement in the oil sector is still controversial in Iran. Many politicians and ordinary Iranians believe the last Shah, Muhammad Reza Pahlavi, allowed foreigners to steal the country's natural resources. The oil ministry fought a tough political battle to convince parliament that foreign participation was in the interests of the nation.
''It took us a while to work out a solution,'' explains Hosseini. ''Under our Constitution, we can't give equity in Iran's natural resources to foreign companies.... We solved that problem with the Conoco development contract.'' The Conoco agreement, copied by Total, is known as a buyback, whereby the foreign company's investment is repaid with future oil sales. Each of 11 new proposals follows this format.
But the prospect of major foreign investment in Iran's oil program has alarmed Washington. Sen. Alfonse D'Amato (R) of New York has proposed a boycott of all foreign firms willing to supply oil equipment or services to Iran. This ''secondary ban'' would force foreign companies, many based in countries closely allied to the US, to choose between trading with Iran and the US.
Mideast analysts note that the US government dubbed illegal a similar boycott (by Arab states on companies willing to trade with Israel).
Clinton has a hard choice: A secondary boycott risks angering businesses and allies; vetoing a ban lays him open to accusations of being soft on a regime he has called a ''sponsor of terrorism - and a potential threat to its neighbors.''