October 1, 2015 / 3:51 PM / 2 years ago

UPDATE 2-Senate panel passes bill to lift U.S. oil export ban, future uncertain

(Adds Democrats in paragraph 8 saying bill wouldn’t necessarily help allies)

By Timothy Gardner

WASHINGTON, Oct 1 (Reuters) - A bill to lift the 40-year-old ban on U.S. oil exports passed the Senate Banking Committee on Thursday, but the future of the measure is uncertain in the full chamber, after a controversial amendment was added to it.

The bill, sponsored by Senator Heidi Heitkamp a Democrat from oil-producing North Dakota, passed 13 to 9. Heitkamp was the only Democrat to vote for the measure.

Senator Pat Toomey, a Republican of Pennsylvania, added an amendment to the bill that would make Iran compensate U.S. victims of Iranian backed terrorism, language that senators said would doom the bill’s future.

“The bill is dead,” because of the addition of the Toomey amendment that the White House likely opposes, said Senator Jon Tester, a Democrat of Montana.

Tester said relaxing the trade restriction could offer Montana, another big oil producing state, some benefits, but legislation to do so would have to be done in a way that does not put jobs at oil refineries and in shipbuilding in danger.

The White House has said it opposes legislation to lift the ban at this time. In addition, it has threatened to veto any bill preventing the president from providing sanctions relief to Iran until $40 billion dollars in restitution has been paid to American victims of Iranian-backed terrorism.

Oil producers and other supporters of lifting the ban, which Congress passed in 1975 when fears about fuel shortages were high, say the restriction will choke the drilling boom as a domestic oil glut grows. Opponents say lifting the ban could harm the environment and hit jobs related to oil refining and shipping.

Several Democrats on the banking committee disputed the notion that the bill could help allies in Eastern Europe diversify their oil sources away from Russia. The bill would not assure oil would be sold to U.S. allies, as crude in global markets is generally sold to the highest bidder, they said.

A similar bill to lift the ban passed earlier in the year in the Senate Energy Committee. This bill too was only supported by one Democrat, Senator Lisa Murkowski of oil-producing Alaska, the head of the panel. Backers of the bill need six Democrats to pass the bill if all 54 Republicans vote for it.

Reporting by Timothy Gardner; Editing by Susan Heavey and Christian Plumb

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