Leading Russian and Indian oil companies will cut links with the Islamic Republic of Iran amid threats of United States sanctions following the withdrawal from the JCPOA, as the 2015 nuclear accord with Iran is known, Radio Free Europe reported Thursday.
Lukoil, Russia’s second biggest oil producer, announced on Tuesday that it will not proceed with projects in Iran. Lukoil had been in talks with Iranian officials over the development of Abe Timur and Mansuri oilfields in west-central Iran. An Lukoil official said, “Considering the latest developments, I guess, it’s too early to say what our plans will be. For the moment, basically, we have everything on hold.”
Meanwhile, India’s Reliance Industries, which owns the world’s biggest refining complex, will halt oil imports from Iran at the end of the year, according to sources familiar with the matter. India’s government had earlier said it would defy U.S. sanctions. Reliance reportedly reached the decision after insurance companies said they would withdraw coverage for Iranian transactions.
Both developments highlight the powerful effect of U.S. sanctions on curbing trade with Iran. Foreign firms that do business with Iran are already being targeted by tailored sanctions. However, U.S. President Donald Trump’s May 8 order expanded the threat by declaring that the old sanctions on shipping, oil and energy will start to be re-imposed within 180 days, as well as that all Iranian state and financial institutions will be relisted in the sanctions list until November 5th.
Lukoil’s announcement follows a decision by French energy giant Total to suspend a $4.9 billion investment in the South Pars gas field, the world’s largest. The French firm cited its heavy reliance on U.S. markets for debt financing as an explanation for its decision.
The German insurance company Allianz and the shipping company Maersk are among other firms which have halted business with Iran since Trump’s announcement. Earlier this month, two Indian banks, IndusInd and UCO bank, asked exporters to complete their financial transactions with Iran by August in reaction to the re-imposition of U.S. sanctions.
Iranian officials have said their biggest fear is the collapse of major contracts with customers for Iran’s oil. Most of the Islamic Republic’s crude exports, at least 1.8 million barrels a day, goes to India, China, and other Asian buyers. Iran said it was placing hopes in the European Union, which said it would keep the nuclear accord alive despite U.S. sanctions.
[Photo: LUKOIL Group / YouTube ]