September 25, 2012
On Sept. 24, the Treasury Department submitted a report to Congress determining that the National Iranian Oil Company is an agent or affiliate of the Revolutionary Guards. The following is an excerpt from the report.
The IRGC is Iran’s most powerful economic actor, dominating many sectors of the economy, including energy, construction, and banking. The IRGC, long a target of U.S. sanctions, has a history of attempting to circumvent sanctions by maintaining a complex network of front companies. The IRGC and certain IRGC-related entities and individuals have been sanctioned for activities related to Iran’s nuclear program, support for terrorism, commission of serious human rights abuses, and most recently for activities related to human rights abuses in Syria, including repression against the Syrian people.
Recently, the IRGC has been coordinating a campaign to sell Iranian oil in an effort to evade international sanctions, specifically those imposed by the European Union that prohibit the import, shipping, and purchase of Iranian oil, which went into full effect on July 1, 2012. NIOC, which is owned by the Government of Iran through the Ministry of Petroleum, is responsible for the exploration, production, refining, and export of oil and petroleum products in Iran.
Under the current Iranian regime, the IRGC’s influence has grown within NIOC. For example, on August 3, 2011, Iran’s parliament approved the appointment of Rostam Qasemi, a Brigadier General in the IRGC, as Minister of Petroleum. Prior to his appointment, Qasemi was the commander of Khatam Al-Anbia, a construction and development wing of the IRGC that generates income and funds operations for the IRGC. Even in his new role as Minister of Petroleum, Qasemi has publicly stated his allegiance to the IRGC. As the IRGC has become increasingly influential in Iran’s energy sector, Khatam Al-Anbia has obtained billions of dollars worth of contracts with Iranian energy companies, including NIOC, often without participating in a competitive bidding process.
Effects of Today’s Determination
As a result of this ITRSHRA section 312 determination, NIOC now is also a person – the legal definition of an individual or an entity – described under section 104(c)(2)(E)(i) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) as an agent or affiliate of the IRGC whose property or interests in property are blocked pursuant to the International Emergency Economic Powers Act (IEEPA). This means that foreign financial institutions determined to knowingly facilitate significant transactions or provide significant financial services for NIOC will be subject to CISADA sanctions, including the prohibition or the imposition of strict conditions on the opening or maintaining of correspondent or payable-through accounts in the United States.
The Treasury Department’s determination that NIOC is an agent or affiliate of the IRGC also implicates section 302 of ITRSHRA, which requires the imposition of sanctions on foreign persons determined to have knowingly provided certain material support to, or engaged in significant transactions with, the IRGC or its officials, agents, or affiliates whose property or interest in property is blocked. ITRSHRA Section 312 provides for an exception to these sanctions for those transactions or services involving NIOC for the purchase of petroleum or petroleum products from Iran if the Secretary of State has determined that the country is significantly reducing its purchases of Iranian oil.
Because both NIOC and NITC are part of the Government of Iran, they are both blocked under Executive Order 13599.