On August 1, the United States sanctioned six companies for helping to sell millions of dollars’ worth of Iranian oil and petrochemical products to East Asian buyers. Petrochemicals, derived from oil and natural gas, are essential to manufacturing paints, plastics, solar panels, medicine, and mobile phones that facilitate modern life.
The Treasury Department named four companies: three based in China, and one based in the United Arab Emirates. Concurrently, the State Department sanctioned a company based in China and another in Singapore, as well as a Panama-flagged tanker. Iran’s Persian Gulf Petrochemical Industry Commercial Co., one of the nation’s largest petrochemical brokers, used the six firms to facilitate the sale and shipment of Iranian oil and petrochemical products.
The move showed that Washington is still prepared to tighten sanctions on both Iran and third parties that deal in Iranian goods, even while seeking to restore the 2015 nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA).
“The United States has been sincere in pursuing a path of meaningful diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action (JCPOA),” Secretary of State Antony Blinken said. “Until Iran is ready to return to full implementation of the JCPOA, we will continue to use our sanctions authorities to target exports of petroleum, petroleum products, and petrochemical products from Iran.” In June 2022, diplomacy to restore the historic agreement faltered after two days of last-gasp talks conducted indirectly between the United States and Iran by an E.U. diplomat in Qatar.
Since President Donald Trump withdrew from the nuclear deal in 2018, the United States has reimposed previous sanctions and added a sweeping array of new sanctions on Iranian government and commercial targets. Trump imposed more than 1,500 sanctions between 2017 and 2021, while Biden has imposed more than 100 since taking office in 2021.
The new sanctions were the third tranche imposed since June 2022 based on Executive Order 13846. The order, signed by President Trump in 2018, required the U.S. government to reimpose all sanctions that had been lifted or waived in connection with the JCPOA.
“The United States is sending the message that it will continue to impose sanctions without a deal in place, but these measures are reversible if diplomacy succeeds,” Henry Rome, the deputy head of research at Eurasia Group, said. “These designations are limited and routine and are unlikely to have a significant, lasting impact on Iran's ability to export energy products.”
U.S. sanctions on Iran’s oil industry, reimposed in November 2018, cut exports from 2.5 million barrels per day down to less than 300,000 by June 2019. But Iran adapted. It disguised its ships, turned off transponders and conducted discrete ship-to-ship transfers to smuggle its oil. In March 2022, Iran exported at least 900,000 barrels per day, mostly to China. The following are statements from the State and Treasury Departments on the new sanctions.
Statement by Secretary of State Antony Blinken
The United States is designating six entities facilitating illicit transactions related to Iranian petroleum as well as petroleum and petrochemical products, key sources of revenue for the Iranian government.
The Department of State is designating Pioneer Ship management PTE LTD, a company that managed one liquified petroleum gas tanker, for serving as the commercial manager for a vessel that transported Iranian petroleum products. The Department is also designating Golden Warrior Shipping, Co. Ltd., that has engaged in transactions related to Iranian petroleum and petroleum products, to include providing logistical support to the Iranian petroleum trade. The Department is further identifying the vessel Glory Harvest as blocked property of Golden Warrior Shipping Co. Ltd.
All of these actions are being taken pursuant to section 3(a)(ii) of Executive Order 13846.
In addition, the Department of the Treasury is designating four entities that support Iran’s Persian Gulf Petrochemical Industry Commercial Co., a U.S.-designated entity, which continues to be involved in the sale of Iranian petroleum products and petrochemical products abroad.
The United States has been sincere in pursuing a path of meaningful diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action (JCPOA). Until Iran is ready to return to full implementation of the JCPOA, we will continue to use our sanctions authorities to target exports of petroleum, petroleum products, and petrochemical products from Iran.
Statement by the Department of the Treasury
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against companies used by Iran’s Persian Gulf Petrochemical Industry Commercial Co. (PGPICC), one of the nation’s largest petrochemical brokers, to facilitate the sale of tens of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iran to East Asia. PGPICC is a subsidiary of Iran’s petrochemical conglomerate Persian Gulf Petrochemical Industry Co. (PGPIC), which accounts for half of all of Iran’s total petrochemical exports.
“The United States continues to pursue the path of diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Until such time as Iran is ready to return to full implementation of its commitments, we will continue to enforce sanctions on the illicit sale of Iranian petroleum and petrochemicals.”
Today’s action is being taken pursuant to Executive Order (E.O.) 13846 and follows OFAC’s July 6, 2022 designation of an Iranian oil and petrochemical network selling Iranian petroleum and petrochemicals to purchasers in East Asia, and the June 16, 2022 designation of an international sanctions evasion network supporting Iranian petrochemical sales.
In a separate but related action, the Department of State is also designating two entities that have engaged in the purchase, acquisition, sale, transport, or marketing of Iranian petroleum and petroleum products, including providing logistical support to the Iranian petroleum trade, pursuant to E.O. 13846.
Iranian Petrochemical and Petroleum Sales to East Asia
PGPICC has used UAE-based Blue Cactus Heavy Equipment and Machinery Spare Parts Trading L.L.C. to facilitate the sale of millions of dollars’ worth of Iranian-origin petroleum products to Triliance Petrochemical Co. Ltd. (Triliance) for onward shipment to East Asia. Triliance remains one of Iran’s most important petrochemical brokers, brokering the sale of Iranian petrochemicals to foreign purchasers. Blue Cactus Heavy Equipment and Machinery Spare Parts Trading L.L.C. is being designated pursuant to E.O. 13846 for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, PGPICC.
PGPICC was designated pursuant to E.O. 13382, a counterproliferation authority, on July 7, 2019, for being owned or controlled by PGPIC. PGPIC was itself designated pursuant to E.O. 13382 that same day for having provided financial support to Khatam al-Anbiya, the engineering conglomerate of Iran’s Islamic Revolutionary Guard Corps (IRGC).
Triliance was designated pursuant to E.O. 13846 on January 23, 2020, for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the National Iranian Oil Company (NIOC).
PGPICC, in cooperation with Treasury-sanctioned Iranian petrochemical broker Petrochemical Commercial Company (PCC), has similarly used Farwell Canyon HK Limited (Farwell Canyon) and Shekufei International Trading Co., Limited (Shekufei) to facilitate the sale of tens of millions of dollars’ worth of Iranian-origin petrochemical and petroleum products for onward shipment to buyers in East Asia. PGPICC has used Farwell Canyon and Shekufei’s bank accounts, as well as those of Hong Kong- and Malaysia-based PZNFR Trading Limited, to collect millions of dollars’ worth of proceeds from these sales.
Farwell Canyon HK Limited, Shekufei International Trading Co., Limited, and PZNFR Trading Limited are being designated pursuant to E.O. 13846 for, on or after November 5, 2018, having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, PGPICC.
Sanctions Implications
As a result of today’s action, all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons.
In addition, persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to an enforcement action. Furthermore, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.
The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please here.
Photo Credit: Petrochemical plant via Tasnim News Agency (CC BY 4.0)