Contractor ‘monitoring the situation’ on £950m gas project, as tensions mount between Tehran and the West

Contractor Costain is monitoring its presence in Iran following the aggressive statements made by Iranian president Mahmoud Ahmadinejad last week.

COGAP, the firm’s oil and gas business, is part of a consortium that won a $1.67bn (£950m) contract from the National Iranian Gas Company to develop the Bid Boland II gas treatment plant.

However, relations between Iran and the West deteriorated dramatically this week after the Iranian president told a rally in Tehran that Israel should be “wiped off the map”.

The comments prompted prime minister Tony Blair to take the unusual step of publicly warning Iran that its comments would not be tolerated.

Andrew Wyllie, the chief executive of Costain, refused to be drawn on the firm’s next move in the light of the political unrest, but remained confident the contract would go ahead.

He said: “There are a number of conditions that have to be met to make the contract effective. Clearly there have been some political issues around that area. We have a minority share in the consortium, with Dragados of Spain and two Iranian contractors.

We think it’s a good opportunity, but only within the right political environment

Andrew Wyllie, chief executive, Costain

“It’s not operational yet, and we’re monitoring the situation. We think it’s a good opportunity, but obviously within the right political environment.”

Recent reports have suggested Iran has imposed unofficial trade sanctions against the UK and some other countries in apparent retaliation for their stand on Tehran’s nuclear energy programme.

At this stage the sanctions are thought to affect consumer imports rather than oil and gas projects.

The UK recently accused Iran of indirect involvement in a spate of attacks against its troops in southern Iraq, which Tehran has denied.

The UK, along with the USA, is leading an international campaign to have Iran referred to the UN Security Council unless it agrees to indefinitely suspend uranium-enrichment activities and gives up on its ambitions for a full nuclear fuel cycle.