The U.S. has several types of sanctions targeting Iran’s petrochemical industry. The U.S. has designated many Iranian entities within the petrochemical industry as SDNs. The U.S. also uses primary and secondary sanctions to target the industry.
Recently, the State Department announced it would no longer provide SRE waivers allowing countries to import limited amounts of Iranian oil.
JPOA Sanctions Relief
Under the JPOA sanctions relief period, the Iranian petrochemical industry benefited from the temporary suspension of sanctions, which was both limited and narrow in nature.
The temporary sanctions relief was implemented by suspending certain sanctions related to correspondent or payable-through account sanctions, blocking sanctions, and menu-based sanctions.
Correspondent or Payable-Through Accounts
The U.S. government will not impose correspondent or payable-through account sanctions under Section 1(a)(iii) of Executive Order 13622, and through certain parts of the Iranian Transactions and Sanctions Regulations (ITSR), on the following:
- Foreign financial institutions, which conduct or facilitate transactions initiated and completed entirely within the JPOA relief period,
- By non-U.S. persons not otherwise subject to the ITSR, and
- For exports of petrochemical products from Iran
This includes transactions involving the petrochemical companies that are listed in the guidance OFAC has issued on this issue. Also, the relief only applies if the transactions do not involve other parties on the SDN list, except for Iranian banks designated solely pursuant to Executive Order 13599. This temporary suspension of sanctions continues until the JCPOA’s Implementation Day. At that time the JCPOA sanctions relief goes into effect and largely replaces this sanctions relief.
The U.S. government has agreed not to impose blocking sanctions under Section 2(a)(i) and (ii) of Executive Order 13645 with respect to persons who materially assist, sponsor, or provide financial, material, or technological support for, or goods or services to or in support of, the petrochemical companies listed in the annex of OFAC’s guidance. This applies so long as these transactions are initiated and completed entirely within the timeframe of the JPOA relief period and do not involve persons appearing on the SDN list other than the Iranian depository institutions designated solely pursuant to Executive Order 13599. This temporary suspension of sanctions will continue until the JCPOA’s Implementation Day, at which time the JCPOA sanctions relief goes into effect and replaces the current, JPOA, sanctions relief.
The U.S. government has agreed not to impose sanctions under Section 2(a)(ii) of Executive Order 13622 on non-U.S. persons not otherwise subject to the Iranian Transaction and Sanctions Regulations. They may engage in transactions only during the JPOA relief period and only for exports of petrochemical products from Iran that are initiated and completed entirely within the JPOA relief period, and they include transactions involving the petrochemical companies listed in the annex of the guidance provided by OFAC on this particular issue. Also, the activities may not involve SDNs that are Iranian financial institutions unless listed solely pursuant to Executive Order 13599.
Petrochemical Products Under the JCPOA
Although U.S.-imposed, primary sanctions against Iran will stay in effect, the United States will lift its nuclear-related, secondary sanctions targeting the petrochemical industry. It will also remove the names of a significant number of Iranian parties involved in the petrochemical industry from the Specially Designated Nationals list. As such, the sanctions relief of the JPOA will be expanded under the JCPOA.
The U.S. will not impose sanctions on non-U.S. persons dealing in Iran’s petrochemical and energy sectors who engage in the following activities: purchase, acquisition, sale, transportation, and marketing of Iranian petroleum, petrochemical products, and natural gas.
Note that currently no foreign-person restrictions exist on:
- the purchase of Iranian petrochemical products
- the amounts of Iranian crude oil destined for six Pacific Rim countries,
- investment in the Iranian energy sector,
- provision of refined petroleum and petrochemical products to Iran, and
- transactions with the Iranian energy sector, including:
- the National Iranian Oil Company (NIOC),
- Naftiran Intertrade Company (NICO), and
- the National Iranian Tanker Company (NITC).