U.S. Markets close in 1 hr 2 mins

GE Pulls Back From Work in Iran

Benoit Faucon

General Electric Co. is planning to end sales of oil and natural-gas equipment later this year in Iran, people familiar with the matter said, illustrating how U.S. withdrawal from the nuclear deal is shutting a narrow window of opportunity for some American businesses there.

GE had big ambitions in Iran after world powers, including the U.S., agreed to lift many sanctions on Tehran in 2016 in exchange for curbs on Iran’s nuclear program. GE’s foreign subsidiaries were preparing as much as $150 million in bids for pipelines, compressors and subsea equipment in Iran and had been in talks with an Iranian manufacturer to make energy equipment, the people said.

The company has all but abandoned those plans, the people said, since President Donald Trump announced on May 8 that the U.S. will pull out of the nuclear deal and impose strong new sanctions against Iran and companies doing business there.

GE Power, the company’s electricity-generation unit, has shut a small office in a leafy neighborhood of Tehran and removed the company’s logo from its entrance, the people said.

Baker Hughes, an energy-equipment company bought by GE last year, has told Iranian merchants that it can’t make any more deals. The company can follow through on already-agreed-upon sales of oil-and-gas equipment to be delivered before Nov. 4, the deadline for the return of U.S. sanctions, the people said.

“We are adapting our activities in Iran as necessary to conform with recent changes in U.S. law,” a GE spokeswoman said. “GE’s activities in Iran to date have been limited and in compliance with U.S. government rules, licenses and policies.”

GE was among the most aggressive of a handful of large American companies that looked to work in Iran after the Obama administration, along with the U.K., France, Germany, China and Russia, lifted sanctions on Iran in 2016. GE and others were allowed to work in Iran under certain circumstances, using foreign subsidiaries walled off from their U.S. operations, with no American employees. These rules kept them from violating remaining U.S. sanctions on Tehran for allegations of human-rights abuses, ballistic missiles and terrorism.

GE affiliates had received Iranian contracts totaling tens of millions of dollars for oil, gas and power equipment since 2017, according to quarterly securities filings. For instance, the company generated about $8 million in Iran from valves and compressor parts for industrial machinery and equipment used in refineries, petrochemical plants and gas-production projects.

Such openings appear to be closing after the decision to reimpose a harsher regime of U.S. sanctions.

After President Donald Trump's big gamble to pull the U.S. out of the Iran nuclear deal, the focus now shifts to Tehran, the Iranian people and America's allies. Gerald F. Seib explains the high stakes. Photo: Getty Related Video

Boeing Co., the world’s largest aircraft maker, stands to lose sales to Iranian airlines of 110 planes valued at roughly $20 billion before industry-standard discounts. The Iranian planes didn’t yet feature in the Chicago-based plane maker’s production plans, Boeing Chief Executive Dennis Muilenburg said at a Bernstein Research conference Thursday in New York.

Smaller U.S. companies selling goods such as medical equipment in Iran are also reconsidering their presence in the country.

A few dozen large American companies are known to have engaged with Iran in recent years—nearly all under explicit exemptions granted by the Treasury Department’s Office of Foreign Assets Control, which oversees the enforcement of sanctions. Those companies are mostly in the sanctions-exempt food and medical sectors, including Coca-Cola Co., Eli Lilly & Co., Johnson & Johnson, Kraft Heinz Co. and Pfizer Inc.

In recent weeks, European companies such as oil giant Total SA, plane maker Airbus SE and industrial conglomerate Siemens AG have said they were pulling back from Iran opportunities to comply with U.S. sanctions.

GE had hoped to provide equipment for Total’s $1 billion natural-gas development, though Total executives now say they are likely to depart the project unless Washington gives it a waiver.

A U.S. official said the Treasury Department has advised Americans and U.S.-owned or controlled businesses that they have until the date sanctions return to wind down operations in Iran. For oil-industry sales, the restrictions return on Nov. 4. He declined to comment on individual licenses.

Asa Fitch contributed to this article.

Write to Benoit Faucon at benoit.faucon@wsj.com and Thomas Gryta at thomas.gryta@wsj.com



More From The Wall Street Journal