Iran oil, petrochemicals get six-month reprieve from sanctions

Pearl Bantillo

21-Jan-2014

Asaluyeh, IranSINGAPORE (ICIS)–Iran will be able to export crude and petrochemical products unhampered in the next six months, with the temporary lifting of international sanctions as stipulated in the country’s nuclear deal with six major powers that took effect this week.

The sanctions relief extends to associated services – including insurance, transportation or financial service – in trading the commodities.

Petrochemical products include any aromatic, olefin and synthesis gas, and any of their derivatives, including ethylene, propylene, butadiene, benzene, toluene, xylene, ammonia, methanol and urea.

“The prohibition on the import, purchase of transport of Iranian petrochemical products and related services has been suspended,” the European Union (EU) said in a statement.

“To enable transport of Iranian crude oil and petrochemical products, the prohibition on the provision of vessels is also suspended,” it added.

As part of the relaxation of sanctions, a number of Iranian petrochemical firms, such as Bandar Imam Petrochemical Co, Jam Petrochemical Co and Iran Petrochemical Commercial Co have been temporarily removed from the Office of Foreign Assets Control/Specially Designated Nationals and Blocked Persons (OFAC/SDN) list.

“It is our expectation that the P&I [protection and indemnity] clubs will confirm that in view of this, ship-owners should be free to send their vessels to load cargoes from Iran provided that none of the parties involved are still on the OFAC/SDN list, and that none of the individuals or companies involved are US citizens or US registered [in accordance with the remaining sanctions],” shipbroker Braemar Quincannon Pte Ltd said in a report.

“It is our hope that there will shortly be confirmation that the trade and transportation of LPG [liquefied petroleum gas] will be treated in a similar way,” it said.

On 24 November 2013 in Geneva, Iran and the six world powers – US, Russia, China, UK, France and Germany – have agreed on a deal that will curb the Middle Eastern country’s uranium enrichment programme in exchange for the partial and temporary lifting of international sanctions.

The sanctions were imposed and progressively tightened in recent years on suspicion that Iran is developing a nuclear weapon.

The six-month lifting of international sanctions took effect on 20 January 2014 and is expected to open up more markets for Iranian crude and petrochemical products, and could influence the price movement of these commodities.

European buyers have started sending out enquiries for methanol from Iran, according to a source at an Iranian producer.

“We will have to look at factors such as freight rates and delivery time. If it works out better, I would offer to Europe, instead of India or China. However right now, the best country to export is India,” the source said.

In India, import prices of methanol have been on the uptrend in recent months on the back of tighter supply, caused by plant outages in Iran and the Middle East.

On 17 January, methanol was assessed at $540-560/tonne CFR (cost and freight) India, according to ICIS.

In Europe, methanol deals were done for January at €390.50-393.00/tonne FOB (free on board) Rotterdam, while February cargoes were traded at €392-393.50/tonne FOB Rotterdam. March trade was at €392-393.50/tonne FOB Rotterdam.

Additional reporting by John Richardson and Fahima Khail

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