The EU has now issued the anticipated implementing regulation
The EU has now issued the anticipated implementing regulation (No 267/2012) envisaged in its Council Decision 2012/35/CFRSP of 23 January 2012. The regulation is effective from 24 January 2012, and applies directly within the EU without the need for further implementing legislation. It updates some existing restrictive measures against Iran and imposes the anticipated ban against Iranian crude oil and petroleum and petrochemical products.
Application
The regulation applies:
(a) within the territory of the Union, including its airspace;
(b) on board any aircraft or any vessel under the jurisdiction of a Member State;
(c) to any person inside or outside the territory of the Union who is a national of a Member State;
(d) to any legal person, entity or body, inside or outside the territory of the Union, which is incorporated or constituted under the law of a Member State;
(e) to any legal person, entity or body in respect of any business done in whole or in part within the Union.
It also includes prohibitions against attempts to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent the measures in the regulation.
General trade restrictions on exports and imports
The regulation does not impose a trade ban as such but it and other EU and national laws continue to severely restrict trade with Iran and Iranian entities and individuals. It repeals and replaces regulation 961/2010 dated 25 October 2010. Amongst other measures it restricts trade in dual use goods and technology including information security, software, nuclear materials facilities and equipment, materials processing equipment and certain electronics, sensors, lasers, and navigation and avionics systems.
Other items (listed in Annex III) can only be sold, supplied, transferred or exported with prior authorisation. The restricted goods and technology include those which could contribute to enrichment-related, reprocessing or heavy water-related activities, to the development of nuclear weapon delivery systems, or to the pursuit of activities related to other topics about which the IAEA has expressed concerns or has identified as outstanding. The regulation also prohibits trade in gold, precious metals or diamonds with the Government of Iran and bans the delivery of newly printed banknotes and coinage for the benefit of the Central Bank of Iran. It restricts investment in the Iranian oil and gas sector and prohibits the loading and unloading of cargoes from ships owned or controlled by IRISL. Existing asset freeze measures have been clarified and justified. The regulation bars the provision of insurance or reinsurance to Iran, the government of Iran or an Iranian entity or body. This does not prevent the provision of insurance to an owner of a ship chartered by an Iranian entity.
Ban on key equipment and technologies in relation to oil and petrochemicals
Under Article 8 of the regulation:
“It shall be prohibited to sell, supply, transfer or export key equipment or technology listed in Annex VI, directly or indirectly, to any Iranian person, entity or body or for use in, Iran.”
Annex VI includes key equipment and technology for the following key sectors of the oil and gas industry in Iran:
(a) exploration of crude oil and natural gas;
(b) production of crude oil and natural gas;
(c) refining;
(d) liquefaction of natural gas.
Annex VI also includes key equipment and technology for the petrochemical industry in Iran.
The list of key equipment includes geophysical survey equipment, drilling equipment including drill bits, pipes, collars and drilling mud, wellheads, blowout preventers, christmas or production trees, drilling and production platforms and ships incorporating drilling and/or petroleum processing equipment. The ban also encompasses key equipment used in the liquefaction of natural gas (including the provision of cryogenic pumps and ships specially designed for the transport of LNG) and in the refining of crude oil (including certain pumps, pipelines, crackers, catalysts, tanks and subsea equipment.
The regulation also prohibits the provision directly or indirectly, of financing technical assistance or brokering services related to these key technologies and bans the provision, manufacture, maintenance and use of the listed goods to any Iranian person, entity or body or for use in Iran.
These prohibitions are subject to certain grace periods and do not apply to transactions required by a trade contract concerning key equipment or technology:
(a) in the exploration of crude oil and natural gas, production of crude oil and natural gas, refining, liquefaction of natural gas concluded before 27 October 2010; or
(b) for the petrochemical industry concluded before 24 March 2012,
provided that appropriate notification is given at least 20 working days in advance to the competent authority of the relevant member state.
Ban on Iranian oil and petroleum products
Under Article 11
“It shall be prohibited:
(a) to import crude oil or petroleum products into the Union if they:
(i) originate in Iran; or
(ii) have been exported from Iran;
(b) to purchase crude oil or petroleum products which are located in or which originated in Iran;
(c) to transport crude oil or petroleum products if they originate in Iran, or are being exported from Iran to any other country; and
(d) to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance related to the import, purchase or transport of crude oil and petroleum products of Iranian origin or that have been imported from Iran.”
Crude oil and petroleum products are listed in Annex IV and include:
Petroleum oils and oils obtained from bituminous minerals including crude oil and waste oil;Petroleum jelly, paraffin or petroleum wax, peat wax, other mineral waxes, and similar products obtained by synthesis or by other processes;Petroleum coke, petroleum bitumen and other residues of petroleum oils or of oils obtained from bituminous minerals;Natural bitumen and asphalt including bituminous or oil-shale and tar sands and bituminous mixtures based on natural asphalt, bitumen, petroleum bitumen, mineral tar or mineral tar pitch.
Ban on Iranian petrochemical products
The regulation also imposes a similar ban in relation to petrochemical products. Under Article 13
“It shall be prohibited
(a) to import petrochemical products into the Union if they:
(i) originate in Iran; or
(ii) have been exported from Iran;
(b) to purchase petrochemical products which are located in or which originated in Iran;
(c) to transport petrochemical products if they originate in Iran, or are being exported from Iran to any other country; and
(d) to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance related to the import, purchase or transport of petrochemical products of Iranian origin or that have been imported from Iran.”
Petrochemical products are listed in Annex V and include ammonia, ammonium nitrate, ethylene, propene (propylene), benzene, styrene, phenols and methanol.
Application and grace periods
The import ban relates to importation into the EU. However the ban on purchase or transportation is not similarly geographically restricted.
The ban of Iranian crude or petroleum products does not apply to the execution until 1 July 2012, of contracts concluded before 23 January 2012, or the execution of contracts concluded before 23 January 2012, providing that the supply of Iranian crude oil and petroleum products are for the reimbursement of outstanding amounts to persons, entities or bodies under the jurisdiction of Member States. These exceptions apply provided that appropriate notification is given at least 20 working days in advance to the competent authority of the relevant member state.
A similar grace period applies in relation to Iranian petrochemicals but the ban does not apply to the execution until 1 May 2012, of contracts concluded before 23 January 2012.
The ban does not apply to the provision, directly or indirectly, of third party liability insurance and environmental liability insurance and reinsurance until 1 May and 1 July 2012 in relation to Iranian petrochemical products and
Iranian crude/petroleum products respectively.
Member States are to apply penalties for infringements of this regulation which are to be “effective, proportionate and dissuasive”.
Members are advised to seek specific legal advice if they believe they will be adversely affected by the new regulation. Members should continue to clearly identify their trading parties and ensure that they take appropriate steps if faced with dealings with designated individuals and entities.
Source: The Standard Club