Since the so-called Implementation Day, the 16th January 2016, Iran has been firmly back on the agenda.
On that date, most EU sanctions were lifted and, for UK businesses in the oil & gas sector, this paves the way for targeting business opportunities in Iran and opens the door to importing oil into Europe from Iran.
Not so for US businesses where only certain “secondary sanctions” have been lifted- that is, sanctions applying to non-US individuals or companies. The US “primary sanctions” continue to prevent US nationals and companies from doing business with Iran.
And it’s this US dimension which creates a grey area. Many businesses here in the UK will have a US connection, be it a parent or subsidiary based over there.
Or perhaps they source products from the US. Or have US funders. Despite the guidance provided by the US Treasury’s Office of Foreign Asset Control, these legal complexities are proving difficult to unravel.
Non-US businesses which are considering doing business in Iran need to ensure that they are not affected by remaining US sanctions, for example because the transaction requires payments in US dollars to be made or received.
Added to these challenges is the task then of navigating Iran’s legal and regulatory regime. A challenge that has been described as “like walking in a minefield”.
With a World Bank Report ranking Iran as 118 out of 189 countries in terms of ease of doing business, the road to business success will be challenging.
But for a UK oil & gas sector that is going through unparalleled turmoil, the opportunities that Iran represents now and in the longer terms are significant.
Iran has clearly signalled its intent to substantially increase its rate of oil production and its international business.
And the financial windfall Iran is set to receive from the release of oil revenues that were frozen when sanctions were originally imposed is expected to give them the financial horsepower to do this.
We are working hard to help clients realise the opportunities that may quickly emerge and to assist in ensuring that their business objectives in Iran are rooted in a compliant and robust legal framework.
To help secure the objectives of our clients in the UK, we are visiting Tehran next month to further deepen our own network of reputable connections in Iran.
All with a view to looking beyond the challenges and to bringing a clearer focus on the opportunities that Iran may offer.
Jamie Stark is a partner at Burness Paull LLP.
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