BRUSSELS: The European Union will hit Iran with tough sanctions against its vital oil and gas industry on Monday in a bid to lure Tehran back to the negotiating table over its disputed nuclear programme.

EU foreign ministers will formally approve the sanctions following Iran`s repeated refusals to halt sensitive nuclear activities, which the West fears are aimed at building a bomb.

The UN Security Council imposed a fourth set of sanctions on Tehran in early June, but EU leaders and the United States decided shortly after to impose their own penalties against the Iranian energy sector.

The sanctions are part of a twin-track approach with EU foreign affairs chief Catherine Ashton seeking to revive moribund talks between Iran and six world powers -- the United States, Britain, France, Germany, Russia and China.

"This (package of sanctions) is about applying pressure, but applying pressure in order to bring the Iranians to the table to talk," a European diplomat said.

Western powers have demanded that Iran suspend its uranium enrichment programme, fearing that Tehran would use the material to build a nuclear bomb. Tehran says that its atomic programme is a peaceful drive to produce energy.

The new EU sanctions include a ban on the sale of equipment, technology and services to Iran`s energy sector, hitting activities in refining, liquified natural gas, exploration and production, diplomats said.

The EU will ban dual-use goods that can be used for conventional weapons. It will also step up vigilance of the activities of Iranian-connected banks operating in the EU and bar them from setting up branches.

"A number of (EU) member states have had to overcome considerable problems with their economic interests in order to adopt this package," the diplomat said.

"It will be in some way the most substantive and far-reaching autonomous sanctions package which the EU has adopted against Iran or any other country," he said.

Iran is the world`s fourth largest producer of crude oil but it imports 40 percent of its fuel needs because it lacks enough refining capabilities to meet demand.

The unilateral US and EU sanctions, seen as much tougher than UN sanctions, were "expected to have a material impact on the country`s energy industry," the International Energy Agency said last week.

The IEA noted that it was "significant" that China and Russia had agreed to back the UN sanctions but that those did not include specific measures aimed at Iran`s energy sector.

The US and EU sanctions were harder, and "longer term, development of the country`s oil and gas industry will clearly be adversely impacted," the IEA said.

"These sanctions are suprisingly strong," said Mark Fitzpatrick, director of the nonproliferation programme at the International Institute for Strategic Studies in London. "They go much further than the UN sanctions."

Fitzpatrick added: "For the first time Iran will face biting sanctions that will significantly impact its economy."

The sanctions "could nevertheless give reasons to Iran to go back to the negotiating table," he said. "In the past, Iran has always moved once it was under pressure of the international community."

EU foreign ministers meeting Monday will urge Iran to set a date for new talks, according to draft conclusions.

The last high-level talks between Iran and the six world powers were held in Geneva in October 2009 when the two sides agreed a nuclear fuel swap that has since stalled.

Iranian Foreign Minister Manouchehr Mottaki said last week that talks could begin in September after Ashton reached out to Iran`s chief nuclear negotiator Saeed Jalili in a letter in June.

According to the draft conclusions, EU foreign ministers will call on "Iran to seize this opportunity to allay the concerns of the international community about its nuclear programme and agree on a concrete date for talks with the EU High Representative, together with the six countries."


BDST: 0858 HRS, July 25, 2010