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Franch Oil Industry Goes Where No-o (r)



By Marcel Michelson 

PARIS, Sept 29 (Reuters) - From two nearby office towers in Paris, French oil
groups Total SA and Elf-Aquitaine SA are plotting their global strategies to
catch up with their bigger U.S. rivals. 

Both companies, state-owned until recently, can rely on France's extensive
diplomatic network to smooth the way to deals and get government backing when
they run into flak. 

Total on Sunday signed a $2 billion deal with Iran for two phases on the
South Pars gas field with the backing of France and a commitment from the
European Union to fend off any backlash from the United States. 

Iran, along with Libya, Iraq and Cuba, are on Washington's black list. 

In 1995, Total signed a deal with Tehran for the Sirri fields. 

Oil industry sources said the South Pars deal could lead to more deals
between Iran and Western companies. ``This deal is for phase two and three
and the Iranians want to go quickly up to phase seven,'' one source said. 

In London, Royal Dutch/Shell (SHEL.L) said it was in talks with Iran over
phase three and four but was not in a position to sign. Elf is reportedly in
talks about investments in Iran's Doroud field. 

The two French companies are prominent among the companies trading with Iraq
under food-for-oil deals permitted under a United Nations embargo. 

France has long been a major supplier to Iraq and froze relations when Iraq's
President Saddam Hussein sent troops to invade Kuwait in 1990. 

France is ready now to help reconstruct Iraq, and Baghdad recently rewarded
the country by buying French wheat under the oil-for-food deal. 

Both Total and Elf have their roots in the Middle East, in Iraq and Iran. 

Total's predecessor, the Compagnie Francaise de Petrole, had been part of an
international consortium active in Iran from 1954 until the 1979 Islamic
revolution. 

Revolutionary leader Ayatollah Ruhollah Khomeini, who ousted the late Shah,
stayed in France before returning to Tehran while key officials of the Shah's
government fled to France. 

Elf expanded into Francophone Africa and its Elf-Gabon unit became an
important source of revenues and profits as well as political influence in
the region. 

Former Elf-Gabon head Andre Tarallo and former presidential security advisor
Jacques Foccart -- Mr Africa for French presidents Charles De Gaulle, Georges
Pompidou and Jacques Chirac until his death in March this year -- were
friends and both very influential in African politics, be it in public or in
back rooms. 

Elf's recent Dhalia oil find off-shore Angola, which was in Portugal's and
not France's sphere of influence, helps it to prove it can do business
outside the former French colonies. 

Total is also active in the Far East and in January signed a deal with
Burma's state-owned Myanmar Oil and Gas Enterprise (MOGE) which caused an
uproar among human-rights activists protesting against the military rules of
that country. 

For Total and Elf, business is for businessmen and politics for politicians. 

``We do not refrain ourselves from working with whatever country in the
region (Middle East). We are in Iran and we hope to be in Iraq. Politics is
not really our business,'' Total's head of Middle East operations, Christophe
de Margerie, said late last year. 

The French groups are also very active in the Caspian sea off-shore business,
despite disputes between Kazakhstan, Turkmenistan, Azerbaijan, Russia and
Iran on which state owns exactly what in the inland sea. 

In the background, observers say, is a battle for influence. All French
presidents since De Gaulle have resented the United States' increasing
political power in the world after World War Two and have used every
possibility open to them to hoist France, as well as Europe, back to its
``rightful'' place on the diplomatic scene. 

13:35 09-29-97