EU firms taking cue from US for Iran trade than own governments

Italian oil major Eni says it will not seek a waiver from the returning US sanctions on Iran because it has no outstanding interests exposed to possible American penalties.

The company has recouped all debts from previous investments in Iran and has only a contract which will expire by the end of the year for supply of 2 million barrels of oil per month, Reuters cited an Eni spokesman as saying.

Eni’s limited activities in Iran “would only be carried out to the extent sanctions allow them,” the spokesman said, according to the British news agency which is usually the first to report news about anti-Iran sanctions.

The state-controlled company had outstanding payments of $280 million owed for previous investments in Iran.

Eni CEO Claudio Descalzi had earlier said the group would start working again in Iran when investments were repaid but he made it clear last month that the company had no plans for any new projects in the country.

Eni was given a special dispensation to recoup investments in Iran by taking Iranian oil by way of payment when it signed an agreement with the Islamic Republic in June 2017 for feasibility studies to develop an oil field and a gas field.

The MoU signed with National Iranian Oil Company (NIOC) included studies on the Kish gas field and the third phase of the Darkhovin oil field in southern Iran but did not include any commitment to invest.

State-controlled Eni, which entered Iran in the 1950s, was involved in the development of the Darkhovin field and the offshore South Pars gas field before US-led sanctions stopped oil majors investing.

The Italian oil and gas major had a $550 million deal to produce 160,000 barrels per day of oil from Darkhovin field which it halted in 2010 before the US and Europe imposed intensified sanctions on the Islamic Republic.

The new sanctions will take six months to kick in, but a number of European companies have already halted their businesses in Iran despite verbal pledges by their governments to protect them against any fallout.

European firms jump the gun on Iran sanctions

Iran has given the Europeans 60 days to guarantee that business ties with the country will continue as the remaining signatories of the nuclear deal are scrambling to save it.

Last month, Descalzi predicted that the reimposition of the sanctions on Iran would create disruptions in oil markets as a result of which investors would eventually suffer.

“The impact is more for the crude oil price, because Iran now is exporting about 2.6 million barrels (per day), and if we go back to the first sanctions, they were exporting 1.5 million,” he said.

In May, French oil major Total announced its plans to pull out of a $2 billion investment in Iran’s South Pars gas field if it did not secure a waiver from the US government.

European governments say they are working to shield trade from the reimpositon of the US sanctions but those pledges have not prevented companies from downing tools in the Islamic Republic.

Leading bank balks at EU plan

On Tuesday, unnamed EU sources were quoted by Reuters as saying that the European Investment Bank (EIB) had balked at an EU proposal to do business in Iran under pressure from the Untied States.

European Commissioners were expected on Wednesday to endorse the EU executive’s plan to encourage the EIB to support investments by European businesses in Iran, the news agency said.

EU angry as states celebrate US exit from Iran deal

Turkey, Russia, China, and the European Union (EU) are trying to defy the United States’ drive to demonize and isolate Iran.

However, it cited what it called EU diplomats, officials and sources at the bank as saying that the Commission’s plan would imperil EIB’s multi-billion-dollar funding, the balk of which is rooted in the US.

“The bank is unhappy with the Commission proposal because the bank raises funds on US markets,” Reuters quoted one unnamed EU diplomat as saying.

The report said Washington has also been lobbying the bank in back channels to object to the Commission’s plan.

“The United States is pushing pressure on the bank not to go ahead and invest in Iran, warning of the consequences,” an EU official was quoted as saying.

Iran was added in March to a list of potentially eligible countries for EIB activity. The bloc wants the measure in place before Aug. 6, when US sanctions begin to take effect.

Europe’s Energy Commissioner Miguel Arias Canete said last month that he had told Iranian officials the new EIB mandate and other measures would be fast-tracked.

However, the US government is reportedly likely to prohibit US persons from investing in the EIB through a new executive order even if the EIB manages to evade American measures.