U.S. Targets Iran’s Energy Partners With Economic Sanctions

The U.S. has imposed sanctions on seven foreign companies for doing business with Iran’s energy industry in ways that might bolster the country’s “illicit” nuclear activities, the State Department announced today.

Separately, the U.S. imposed sanctions on 16 non-U.S. companies and individuals for aiding weapons and missile programs in Iran, North Korea or Syria.

“Today’s actions add further pressure on Iran to comply with its international obligations,” said James Steinberg, deputy secretary of state, who announced the sanctions in Washington. Iran already operates under sanctions, including an arms embargo imposed by the United Nations.

The new U.S. sanctions imposed on energy companies include provisions that prohibit them from U.S. foreign exchange transactions, U.S. banking transactions and U.S. property transactions.

Some of the companies face lesser sanctions, barring them from securing financing from the Export-Import Bank of the U.S. and from obtaining loans of more than $10 million from U.S. financial institutions.

The seven companies targeted under the Iran Sanctions Act for their energy work are Petrochemical Commercial Company International (PCCI) of Jersey and Iran; Royal Oyster Group of the United Arab Emirates, Speedy Ship of United Arab Emirates and Iran; Tanker Pacific of Singapore; Ofer Brothers Group of Israel; Associated Shipbroking of Monaco; and Petroleos de Venezuela of Venezuela, according to the State Department.

Company Denial

Tanker Pacific, Ofer Brothers, and Associated Shipbroking were sanctioned “for their respective roles in a September 2010 transaction that provided a tanker valued at $8.65 million to the Islamic Republic of Iran Shipping Lines (IRISL), an entity that has been designated by the United States and the European Union for its role in supporting Iran’s proliferation activities,” according to a State Department fact sheet. Tanker Pacific and Ofer Brothers Group “failed to exercise due diligence and did not heed publicly available and easily obtainable information that would have indicated that they were dealing with IRISL.”

An e-mailed statement from the Ofer Brothers Group spokesman’s office said, “We have never sold ships to Iran.” The statement added that authorized Israeli officials would be able to confirm the denial. It didn’t elaborate.

Petroleum Targeted

While the sanctions specifically target refined petroleum-related activities, the State Department said the measures “target Iran’s ability to acquire and utilize resources in support of its illicit nuclear activities.”

The harshest sanctions were reserved for PCCI, Royal Oyster Group and Speedy Ship. The State Department said the three firms “regularly engaged in deceptive practices” to ship refined-petroleum products to Iran and evade U.S. sanctions.

In a separate action, the State Department imposed sanctions on 16 individuals and firms under the Iran, North Korea and Syria Nonproliferation Act.

The department said the 16 entities transferred or acquired equipment and technology that can be used for weapons of mass destruction or missile systems in Iran, North Korea and Syria.

The sanctions, which will be in effect for two years, bar the U.S. government from doing any business or assisting the 16 individuals and firms, which are from Belarus, China, Iran, North Korea, Syria and Venezuela.

Named Companies

Those targeted are Belarusian Optical Mechanical Association and BelTechExport of Belarus; Karl Lee, Dalian Sunny Industries, Dalian Zhongbang Chemical Industries Company and Xian Junyun Electronic of China; Milad Jafari, Defense Industries Organization, Islamic Republic of Iran Shipping Lines, Islamic Revolutionary Guard Corps Qods Force, SAD Import-Export Company and Shahid Bakeri Industries Group of Iran; Tangun Trading of North Korea; Industrial Establishment of Defense and Scientific Studies and Research Center of Syria; and Venezuela Military Industries Company of Venezuela.

“The State Department’s message indicates that they will choose relatively toothless sanctions to avoid any unnecessary further pressures in an already tight oil market” heading into next year’s U.S. elections, said Patrick Esteruelas, an analyst at Moody’s Investors Service in New York, referring to the sanctions on the Venezuela state oil company.

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