Sanctions Hit Iran's Foreign Revenues

The UK's Rhum field has been granted a “conditional” waiver from the US sanctions on Iran October 9. Azerbaijan’s Shah Deniz field was exempted in August 2018, but in the both cases, the condition is that Iran's revenues are held in escrow, a source at BP, the operator of both projects, told NGW.

The Naftiran Intertrade Company (NICO) has a 10% share in Shah Deniz and the Iranian Oil Company owns a 50% stake in the Rhum field. Both companies are subsidiaries of the state-run National Iranian Oil company. Iran will not have access to revenues from these projects from next month onward when US sanctions will be in force once again.

The BP source said that Iran’s revenues will be deposited and blocked in a bank account in Cayman Islands, an autonomous British overseas territory in the Caribbean Sea.

The first round of sanctions on Iran was implemented in August 2018 and mainly covers industrial sectors; whereas oil-related (including gas) sanctions will come into force on November 4.

During the 2012-2015 sanctions regime, Statoil (re-named Equinor in 2018) was the commercial operator of the Shah Deniz project and Iran’s revenues were then deposited to a bank account in Norway and blocked there.

All of Shah Deniz's partners have the same stakes in the South Caucasus pipeline, plus its expansion SCPX, the Caucasian part of Southern Gas Corridor, that stretches from the Caspian Sea to the Georgian border with Turkey. Statoil left the project in 2014 and the Azerbaijan Gas Supply Company, operated by state-run Socar, replaced it.

All of Iran’s revenues from Shah Deniz and SCP will be blocked. During the 2012-2015 sanctions period, BP had to suspend Rhum operations, because it was unable to obtain a US waiver at the time.