25th Oct 2016

EU to ban investments in Iranian gas and oil

EU foreign ministers meeting in Luxembourg on Monday (14 June) agreed on a fresh batch of sanctions against Iran aimed at halting its nuclear program, with the new measures to target the country's massive oil and gas industry.

The new sanctions are pending the approval of EU leaders meeting on Thursday in Brussels during a mainly EU economy-oriented summit.

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  • The EU's new sanctions will postpone indefinitely the prospect of importing Iranian gas into the union (Photo: gazdefrance.com)

They come as "accompanying and supporting measures" to the United Nations' sanctions agreed last week in New York, EU foreign policy chief Catherine Ashton said in a press conference.

Ms Ashton added that the door for dialogue remains open and that has she written to Iran's chief nuclear negotiator Saeed Jalili, inviting him to resume negotiations on behalf of Germany and the five UN Security Council permanent members - the United States Russia, China, Britain, France.

"I stand ready to meet with the Iranians if they are willing to discuss the key issue, the nuclear issue," she said after Monday's meeting.

Under the envisaged deal, Iranian banking and financial services will be banned from selling their products in the EU.

Member states will also move to freeze EU-based bank accounts belonging to members of Iran's Revolutionary Guard, while Irisil, an Iranian shipping company, will be barred from operating in EU waters.

EU companies will also have to take a toll from the proposed sanctions, as they will be prohibited to invest in or offer technical assistance and technology transfers to Iran's oil and gas industry.

Iran is OPEC's second largest oil exporter and has the world's second-largest reserves of natural gas. European companies such as Gas de France or Austria's OMV have in the past years signed various memoranda of understanding for developing the country's gas fields, but were in the end forced to pull out. OMV has also pushed for Iran to be considered as a source for the EU-backed Nabucco gas pipeline via Turkey.

Discussions on Monday afternoon were "difficult," as some foreign ministers, notably France's Bernard Kouchner, insisted that the sanctions should not harm the country's population. Sweden's Carl Bildt also said that "sanctions alone cannot solve the problem of Iran's nuclear program."

Most ministers in the end supported the shift to tougher sanctions, however. "I think Europe can toughen sanctions for oil and gas technologies, visa regime and for products which can be used both for military and civilian purposes," Italian foreign minister Franco Frattini was quoted as saying by Austrian press agency APA.

Germany's Guido Westerwelle, whose country's exports to Iran reached €3.7 billion last year, also backed the sanctions as "an important signal of determination," although he was reportedly more reluctant to support the oil and gas-related measures.

The UN has already imposed several sets of sanctions against Tehran, the last one authorising high-seas inspections of vessels believed to be ferrying banned items to Iran and adding 40 entities to a list of people and groups subject to travel restrictions and financial sanctions.

The Iranian government says its nuclear program is purely for civilian purposes, but Western powers suspect it is trying to develop the bomb. Iranian President Mahmoud Ahmadinejad last week called the UN Security Council a "tool of dictatorship" and warned that new sanctions "will have no effect."

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