BP Stops Work On Gas Field Shared With Iran In Compliance With U.S. Sanctions

by Bamidele Ogunberu Posted on May 23rd, 2018

London, U.K : BP has stopped work on the Rhum gas field in the North Sea, which it has a 50-percent stake in, sharing it with the National Iranian Oil Company. The company cited the reintroduction of US sanctions against Tehran as the reason.

“BP has decided to defer some planned work on the Rhum gas field in the North Sea while we seek clarity on the potential impact on the field of recent US government decisions regarding Iran; Rhum is co-owned by an Iranian company. BP always complies with applicable sanctions.” The company, which agreed to sell its stake in Rhum to another UK-based company, Serica Energy, said

Both BP and Serica are in talks with UK and US authorities to make sure they are not in breach of the sanctions announced on May 8th as President Trump pulled the Untied States out of the Joint Comprehensive Plan of Action, commonly referred to as the Iran nuclear deal.

BP discovered the Rhum field back in the 1970s. Production was suspended in the early 2000s as the US and several European countries imposed sanctions on Iran for its nuclear program. BP, whose chief executive Robert Dudley is an American citizen, struck a deal with smaller Serica to sell its 50 percent in the field for US$400 million.

At the moment, BP operates the field under a license granted it by the Office of Foreign Asset Control, OFAC – the Treasury Department’s sanction-enforcement division – which was renewed last September and will expire and the end of September this year. OFAC administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives.

In the meantime, the BP/Serica deal is going according to plan, seen to wrap in the third quarter of the year. A condition for the successful completion of the acquisition was Serica getting its own license from the OFAC. Serica is reportedly still awaiting one.

The Rhum gas field in the North Sea supplies 5% of the UK’s gas.

BP does huge amounts of business in the US and will be keen to avoid being seen as a business partner of the Iranian state.

In 2012, HSBC paid a $1.9bn US fine for breaching certain sanctions, including the one imposed on Iran. Standard Chartered paid a $400m fine for Iranian sanction-busting activity.

Both HSBC and Standard Chartered did not re-enter the Iranian market after the original sanctions were lifted.

EARLIER: Trump Withdraws U.S. From Iran Nuclear deal, Reinstates Sanctions – Washington, D.C., USA: The U.S. is withdrawing from the Iran nuclear deal and will reinstate the “highest level” of sanctions, President Trump announced, Tuesday.

“It is clear to me that we cannot prevent a nuclear bomb under the decaying and rotten structure of the current deal. The fact is that this was a horrible, one-sided deal that should have never ever been made,’’ Trump said.

The deal, signed in 2015, by Trump’s predecessor, President Barack Obama, placed strict limits on Iran’s nuclear program to keep it from developing nuclear weapons. It required ongoing inspections and the destruction of nuclear equipment. In return, Iran got relief from some economic sanctions.

Six nations signed the deal with Iran — the U.S., U.K., France, Germany, China and Russia. It was approved by the U.N. Security Council. (It’s titled the Joint Comprehensive Plan of Action.)

This was in exchange for commitments to halt what Western powers feared was a nuclear weapons programme.

France, Germany and the UK launched a diplomatic offensive in recent weeks attempting to persuade Trump not to scuttle the deal which aims to prevent Iran from obtaining nuclear weapons.

Trump said he opposed the agreement, called the Joint Comprehensive Plan of Action (JPCOA), during the 2016 presidential campaign.

Since taking office, he has repeatedly threatened to pull the U.S. out of the pact, recently calling it a “horrible deal’’.

Over the years, Congress has passed numerous sanctions against Iran but given the president the power to waive their enforcement. They come up for waiver or renewal every few months, and the next deadline is Saturday. Under its part of the bargain in the deal, the U.S. has been waiving some of the sanctions — that is, kept them from being enforced — repeatedly.

Trump today said he would not issuing the waivers, meaning they would be reimposed on Iran.

If they were reimposed, they could making it harder for countries or companies buying oil from Iran and their associated U.S. banks and markets.

Economic sanctions are complicated and the details have to be spelled out in U.S. Department of the Treasury regulations. In the past, the oil sanctions still allowed countries to continue buying oil, with some limits, from Iran. And certain types of industries can be exempted from sanctions.

If that’s something Trump has in mind, it might soften the blow for U.S. allies — and for Iran.

Trump and opponents to the deal say it is flawed because it gives Iran access to billions of dollars but does not address Iran’s support for extremist groups. They note it also doesn’t curb Iran’s development of ballistic missiles and that the deal phases out by 2030. They say Iran has lied about its nuclear program in the past.

Deal supporters say it keeps Iran from building nuclear weapons and that will make it easier to deal with Iran’s other behavior around the region — better to have an Iran without nukes than with them, in other words. They say evidence that Iran has lied in the past makes it all the more necessary to have a deal that keeps inspectors on the ground in Iran. They say ending the deal could prompt Iran to develop nuclear weapons and even set off a nuclear race in the Mideast.

The International Atomic Energy Commission, which enforces the deal, and U.S. officials have said Iran is complying with its terms.

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Bamidele Ogunberu

Bamidele Ogunberu

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