Sanctions won’t harm Iran’s oil exports if EU keeps its promises, oil minister says

Iran’s oil minister Bijan Zangeneh does not expect the country’s oil exports to be hurt by the recently reimposed U.S. sanctions if the EU sticks to its promises to keep the nuclear deal alive.

To remind, the U.S. early in May terminated its participation in the Joint Comprehensive Plan of Action agreed upon in 2015, that was designed to prevent Iran from building a nuclear bomb, with Iran, in exchange, getting economic sanctions lifted.

Terminating the deal, U.S. president Trump said the U.S. would start reinstating “the U.S. nuclear sanctions on the Iranian regime.”

“We will be instituting the highest level of economic sanction. Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States,” the U.S. president said.

The U.S. said it would impose sanctions on the Iranian energy sector, with the aim to cut Iran’s crude oil sales, reduce Iranian oil revenues, and discourage transactions with the Central Bank of Iran, “by providing for sanctions on foreign financial institutions that knowingly conduct or facilitate certain significant financial transactions with the CBI.”

The EU representatives have said they’ve been disappointed by the U.S. move, but still committed to keeping the nuclear deal, and the economic cooperation with Iran, in place.

According to Iranian government’s energy news website Shana, Iranian Minister of Petroleum Bijan Zangeneh said on Saturday:” “I believe if the EU helps us and honors its statements, the level of Iran’s oil exports will remain intact …”

 

…if the EU helps us and honors its statements, the level of Iran’s oil exports will remain intact …”.

EU working on Blocking Statute

He also said, Shana reported, that there has not been any negative feedback from India and China with regards to the continued oil purchase from Iran, and the effects of the looming U.S. sanctions on Iranian oil exports.

Zangeneh was speaking following a meeting in which he hosted EU’s Climate Action and Energy Commissioner Miguel Arias Cañete in Tehran on Saturday, May 19, 2018.

Meanwhile, the EU has started working on means to protect the interest of the EU companies investing in Iran.

The President of the European Commission, Jean-Claude Juncker said last week: “As long as the Iranians respect their commitments, the EU will, of course, stick to the agreement of which it was an architect – an agreement that was unanimously ratified by the United Nations Security Council and which is essential for preserving peace in the region and the world.

“But the American sanctions will not be without effect. So we have the duty, the Commission, and the European Union, to do what we can to protect our European businesses, especially SMEs.”

The commission is proposing to activate the Blocking Statute by updating the list of US sanctions on Iran falling within its scope.

The Blocking Statute forbids EU companies from complying with the extraterritorial effects of US sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the EU of any foreign court judgments based on them. The aim is to have the measure in force before August 6, 2018, when the first batch of US sanctions take effect.

EIB to invest in Iran?

Also, the commision has launched the formal process to remove obstacles for the European Investment Bank (EIB) to decide under the EU budget guarantee to finance activities outside the European Union, in Iran. According to the European Commission, this will allow the EIB to support EU investment in Iran and could be useful in particular for small and medium-sized companies. All relevant rules and procedures will apply to individual financial operations.

Furthermore, the Europan Commission has encouraged EU countries to explore the possibility of one-off bank transfers to the Central Bank of Iran.

“This approach could help the Iranian authorities to receive their oil-related revenues, particularly in case of US sanctions which could target EU entities active in oil transactions with Iran,” the commission said.

Worth noting, while the EU is working to help its alleviate the U.S. sanctions impact on the EU companies doing business in Iran, Total, the French oil major last week said it would stop all operations on the development of the giant South Pars Phase 11 gas project in Iran, due to the U.S. decision, unless it is granted a waiver.

Total does not want to risk the loss of financing in dollars by US banks for its worldwide operations. According to Total, US banks are involved in more than 90% of Total’s financing operations.

Furthermore, the company would be also risking the loss of its US shareholders, who represent more than 30% of Total’s shareholding. Finally, Total fears that, unless it is granted a waiver, the company might be put in a situation where it would be unable to continue its US operations. Total has shared that the US assets represent more than 10 billion dollars of capital employed.

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Offshore Energy Today Staff