Iran Sanctions - Foreign Press Centers

Non-Application to Crude Oil or Natural Gas Purchases from Iran or to
Official Credit Guarantee Agencies
Iran Sanctions
Simple purchases of oil or natural gas from Iran are generally considered not to constitute
violations of ISA, because ISA sanctions investment in Iran’s energy sector and sales to Iran of
gasoline or gasoline-related services or equipment. Some of the deals listed in the chart later in
this report involve combinations of investment and purchase. However, as discussed later, several
countries are considering banning purchases of crude oil or natural gas as the optimal means of
pressuring Iran’s economy.
ISA does not sanction sales to Iran of equipment that Iran could use to explore or extract its own
oil or gas resources, unless such sales are structured to provide ongoing profits or royalties (and
therefore meet the definition of investments as provided in ISA). 7 For example, selling Iran an oil
or gas drill rig or motors or other gear that Iran will use to drill for oil or gas would not appear to
be sanctionable under ISA, unless the sale is structured to provide the seller ongoing profits or
royalties. However, this exception was voided by Executive Order 13590 (November 21, 2011),
which does provide for sanctions against sales of such equipment and services.
Official credit guarantee agencies are not considered sanctionable entities under ISA. In the 110 th
Congress, several bills—including S. 970, S. 3227, S. 3445, H.R. 957 (passed the House on July
31, 2007), and H.R. 7112 (which passed the House on September 26, 2008)—would have
expanded the definition of sanctionable entities to official credit guarantee agencies, such as
France’s COFACE and Germany’s Hermes, and to financial institutions and insurers generally.
Some versions of CISADA would have made these entities sanctionable but these provisions
were not included in the final law, probably out of concern for alienating U.S. allies in Europe.
Table 1. Top Energy Buyers From Iran (2011)
(amounts in barrels per day, bpd)
European Union (particularly
Italy, Spain, and Greece)
600,000
China 550,000
Japan 327,000
India 310,000
South Korea 228,000
Turkey 196,000
South Africa 80,000
Singapore 50,000
Total 2.34 mbd
(nearly all of Iran’s oil
exports)
Source: International Energy Agency, CRS. March 2012
7
Prior to CISADA, the definition of investment in ISA specifically exempted sales of equipment or services under that
definition. CISADA omitted that exclusion.
Congressional Research Service 8