French oil giant Total was warned by President Nicolas Sarkozy in September to refrain from investing further in Iran, but at this writing is still discussing a $15 billion LNG terminal in Iran’s South Pars gas field. In November, Total CEO Christophe de Margerie told Reuters that he “would be happy to have a (South Pars) contract ready for signing, but there is no contract yet.”

Discussions only slowed recently when Iran reportedly rejected a Total investment proposal of $11.2 billion, but the pace is likely to pick up in 2008. Rome-based APS Engineering confirmed it had already signed a $585 million deal as part of a consortium in the same South Pars project. And another consortium that includes German company Linde and Italy’s Eni subsidiary Snamprogetti is planning to submit plans for the LNG plant at South Pars, according to a report from the Islamic Republic News Agency.

The agency also reported that Spanish energy company Union Fenosa’s subsidiary Socoin was awarded a 32.5 million euro engineering contract in August; that Austria’s OMV awaits finalization of a preliminary LNG agreement it signed with Iran in April; and that Germany’s E.On is interested in buying natural gas from Iran.

In an even more blatant snub to the U.N. and the U.S. sanctions, Paolo Scaroni, Eni’s chief executive, said his company would “stick to [its] contracts” and that forcing Eni to break them would not be “appropriate.” Scaroni did say that he was unaware of any major Western energy companies investing in Iran. But it is known that Royal Dutch Shell and Spain’s Repsol have been recently negotiating to develop parts of South Pars, the world’s largest gas field.

And in December, China’s Sinopec announced its own $2 billion deal with the Iranians (see this issue’s China section, page 30). If Western energy giants needed a wake-up call that they are about to miss out big-time, this is it. Yet Washington has grown increasingly vociferous in its warnings to European companies in general and energy companies in particular: BP and Shell were told they risk losing U.S. business if they continue their dealings with Iran.

Gholam-Hossein Nozari, Iran’s oil minister, recently told The Financial Times that they have set a commitment deadline of June 2008 for Western energy company projects in Iran. While the threat smacks of negotiating bluster – Iran badly needs massive amounts of foreign capital to develop its energy infrastructure – it has turned up the heat on Western energy companies.