Iranian-Imposed Oil Embargo Could Batter EU Firms with Buyback Deals

European companies owed oil by Iran could lose out should Tehran impose a ban on crude exports to the European Union next week, the head of Iran's state oil company said Saturday.

Iran's parliament is due to debate a bill Sunday that would cut off oil supplies to the EU in a matter of days -- tit-for-tat retaliation following a decision on Jan. 23 by the 27 EU member states to stop importing crude from Iran as of July 1.

Generally, the parties to incur damage from the EU's recent decision will be European companies with pending contracts with Iran, Ahmad Qalebani, head of the National Iranian Oil Co., told the ISNA news agency.

The European companies will have to abide by the provisions of the buyback contracts, he said. If they act otherwise, they will be the parties to incur the relevant losses and will subject the repatriation of their capital to problems.

By turning the sanctions back on the EU, Iranian lawmakers hope to deny Europe the six-month window it had planned to give those countries most dependent on Iranian oil -- including some of the most economically fragile -- time to adapt.

In its action last week, the EU not only banned imports of oil from Iran but also imposed a number of other economic sanctions, joining the United States in a new round of measures aimed at deflecting Tehran's nuclear-development program.

Under buyback contracts, a common feature of the Iranian oil industry, investments in oil-field projects are paid back in oil, often over many years.

Italy's Eni says it is owed between $1.4 billion and $1.5 billion in oil for contracts in Iran dating from 2000 and 2001. It has been assured by EU policy makers its buyback contracts will not be part of the European embargo, but the prospect of Iran acting first may put that into doubt.

The EU accounted for 25 percent of Iranian crude oil sales in the third quarter of last year.

(Writing by Robin Pomeroy; Editing by David Stamp)