On 20 January 2014 relaxations on Iran sanctions came into effect. The EU Council Regulation 267/2012 which imposes considerable restrictions on trade between EU member states and Iran was suspended for the period of six months. It has to be noted that the sanctions may be reinstated if Iran does not live up to its commitments. In exchange for significant concession regarding its nuclear enrichment program sanctions were loosened most significantly in three areas:
1) The carriage of crude oil from Iran to countries that benefit from US sanction waivers. These countries are currently China, India, Japan, Taiwan, South Korea, and Turkey;
2) The carriage of petrochemical products from Iran; and
3) Insurance coverage for permitted trade and period of time.
Import and purchase of Iranian oil and petroleum is still restricted for any country that does not benefit from an NDAA waiver. However, shipowners are now free to ship those products to the countries benefitting from a waiver. The EU sanctions on petrochemical products are lifted entirely and as a consequence, carriers are free to ship Iranian petrochemicals to EU and non-EU states.
Issues to note
As mentioned, the relief had been agreed in the Joint Plan of Action on 24 November 2013 and will last until 20 July 2014. Whether the relief will be revoked after 20 July or extended or even expanded depends on developments in the interim.
The suspension of the EU Council Regulation does not provide relief from the current prohibitions concerning designated persons or entities. Therefore, trading with or chartering of vessels to (NITC or other) Iranian designated persons or entities is not permitted.
It should be kept in mind that whilst the sanctions in respect of the above trades may be lifted temporarily, there are still notifications to be made and/or authorisations to be obtained for payments above a certain level. It has been indicated by the International Group of P&I Clubs that the level at which authorisation will be required should increase so that parties may make payments to an Iranian person, entity or body of up to Euro 400,000 without having to seek prior authorisation from their competent authority.
Further, the suspension of the Council Regulation allows clubs to provide cover to both EU and non-EU owned or registered vessels undertaking transportation of oil and petroleum products as well as petrochemicals.
Japan’s main private ship insurer, the Japan P&I Club, said it has resumed normal coverage for tankers carrying Iranian oil, providing normal coverage of $7.6 billion per ship, including $1 billion for oil spills.
On 20 January 2014 the US government issued guidance relating to the suspension of certain US sanctions in order to implement the Joint Plan of Action. During the six months period the US suspends sanctions in correspondence with the EU sanctions relief. It has to be noted, however, that the US sanctions relief only applies to non-US persons and is therefore of little value to US based companies.