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Iran Moves to Skirt EU Oil Restrictions

An Iranian Revolutionary Guard speedboat passes near an oil tanker in the Strait of Hormuz last week. Iran intends to sell petroleum to a number of European processing firms through a nongovernmental group, potentially circumventing sanctions adopted against the country over its atomic activities (AP Photo/Vahid Salemi). An Iranian Revolutionary Guard speedboat passes near an oil tanker in the Strait of Hormuz last week. Iran intends to sell petroleum to a number of European processing firms through a nongovernmental group, potentially circumventing sanctions adopted against the country over its atomic activities (AP Photo/Vahid Salemi).

A number of European petroleum processing firms have agreed to purchase oil from Iran through a nongovernmental group, possibly enabling the sides to skirt punitive measures aimed at pressuring Tehran to address worries that its nuclear program is geared toward establishment of a weapons capability, Reuters reported on Saturday (see GSN, July 9).

Iran, which insists its nuclear program has no military component, is expected this month to sell only half of the petroleum it did in July 2011 following last week's implementation of a European Union embargo on Iranian oil (Yeganeh Torbati, Reuters I, July 7). The Persian Gulf regional power is significantly curtailing petroleum output in response, and is losing billions of dollars in oil income (Mackey/Lawler, Reuters II, July 9).

Still, an EU prohibition on insuring Iranian petroleum deliveries would be unable to affect an arrangement by Iran's central bank, the Iranian Oil Ministry and an organization of merchants trading internationally in petroleum goods, trade group leader Hassan Khosrojerdi said. Khosrojerdi specified neither the participating processing companies nor the means by which they would obtain petroleum under the arrangement.

"There have been discussions with European refiners, and a final agreement has even been reached," Iran's Mehr News Agency quoted him as saying. "In accordance with the agreement, it is planned that 20 percent of Iran's oil exports will go through this private consortium."

"It is likely that because of international restrictions, we will give minor privileges or discounts to some of the buyers of our oil," Khosrojerdi added.

"With the agreement with some of the European refiners, [the insurance restriction] problem has been solved completely," he said.

The state-run firm National Iranian Oil previously acted alone in initiating transactions involving petroleum from the country. Independent petroleum sales to other countries received endorsement from the Oil Ministry in May, according to earlier reporting by the Iranian Students' News Agency (Torbati, Reuters I).

"Despite the imposition of oil embargoes against Iran, some European companies operating in the refining industries still want to continue trade with [National Iranian Oil]," company head Ahmad Qalebani said on Monday in remarks reported by the nation's Fars News Agency. "We sell oil to demanding European refineries through coordination with the central bank" (Fars News Agency I, July 9)

Chinese and Indian purchases of Iranian unrefined petroleum are set to continue under a proposal by Tehran to independently deliver and insure the product, Agence France-Presse reported. South Korea stopped receiving Iranian oil on July 1 but could also join the plan.

International relations officials, though, said the Iranian plan could pose a number of complications. National Iranian Oil's existing fleet of delivery vessels has a limited capacity, and its shipping capabilities are now further restricted by the need for ships to hold unsold petroleum.

Tehran has indicated it would build new ground-based facilities for holding petroleum; its existing sites are now full. In addition, Iran is due in the last month of 2012 to acquire the first of 12 large petroleum carrier ships purchased from China.

"But these solutions do not solve the problem in the short term," one analyst said. The EU insurance limitation "currently has as much impact" on Iranian petroleum sales as the 27-nation bloc's embargo, according to the specialist.

Separately, Japan's government is empowered under recently enacted legislation to provide as much as $7.6 billion in reinsurance for shipments of unrefined petroleum from Iran (Laurent Maillard, Agence France-Presse I/Google News, July 9).

U.S. House Foreign Affairs Committee Ranking Member Howard Berman (D-Calif.) has urged Tuvalu to end its registration of Iranian petroleum shipment vessels, a practice that could streamline efforts by funders and insurers to cover oil deliveries, Reuters reported on Monday.

Tuvalu has registered up to 22 National Iranian Tanker vessels, Berman said.

"This has the effect of assisting the Iranian regime in evading U.S. and EU sanctions and generating additional revenues for its nuclear weapons program and its support for international terrorism," Berman warned in a written communication to Tuvalu Prime Minister Willy Telavi.

Registering the ships might be considered "sanctionable activity," according to Berman, who called on the leader to nullify the registration for every National Iranian Tanker ship.

"Given the close and cooperative relationship that our two governments now enjoy, it would be unfortunate if this action were permitted to stand," the lawmaker added.

Tanzania's top diplomat last week vowed to honor a similar request by Berman.

"If it is confirmed that the ships flying Tanzania's flag are indeed from Iran, we will take steps to deliberately obliterate the registration," Tanzanian Foreign Affairs Minister Bernard Membe said to journalists (Roberta Rampton, Reuters III, July 9).

Iran's legislature intends to convene a number of top officials to confer on a potential legal mandate to block the Strait of Hormuz, Fars News quoted an author of the proposed measure as saying on Sunday. Officials and lawmakers in Tehran have threatened to close the strait, a key channel for the shipment of Middle Eastern petroleum, in retaliation for oil trade restrictions.

"In order to study the bill on the blockading of the Strait of Hormuz better and more precisely, [chief Iranian nuclear negotiator Saeed Jalili] and a number of officials from the foreign ministry and the general staff of the armed forces will be invited to the parliament and their views and proposals will be used," legislator Seyed Mehdi Moussavinejad said (Fars News Agency II, July 8).

Iranian Foreign Minister Ali Akbar Salehi played down the possibility of Tehran acting on the threat, Fars News reported on Tuesday.

"Probably those who have suggested this idea have in mind that if Iran is denied access to the Persian Gulf for whatever reason ... then Iran will probably react appropriately," he said. "But I don't think such a time will ever come" (Fars News Agency III, July 10).

The aircraft carrier USS John C. Stennis is slated to depart for the Persian Gulf region late next month, years before it was previously scheduled to return to the area, the Kitsap, Wash., Sun reported on Monday.

Navy spokesman Lt. Cmdr. Zach Harrell said the service had yet to formally declare the ship's planned movements (Ed Friedrich, Kitsap Sun, July 9).

Iranian Gen. Shahroukh Shahram on Monday said anti-aircraft systems at the army's Khatam ol-Anbia Air Defense Base "are fully prepared to defend the Islamic homeland's territory," Fars News reported (Fars News Agency IV, July 9).

An Iranian lawsuit seeks to win $4 billion in compensation from Russia for its cancellation of a deal to provide Tehran with S-300 air defenses, Vedomosti reported on Monday. Experts previously suggested Tehran could deploy the system to help protect its atomic installations from potential airstrikes (Alexi Nikolsky, Vedomosti, July 9).

Iranian diplomats last month defended their nation's production of 20 percent-enriched uranium in computer slides shown to counterparts from six major governments, despite indications that Tehran was willing to restrict the disputed operation in a potential compromise, the Christian Science Monitor reported on Monday (Scott Peterson, Christian Science Monitor, July 9).

A member of the Iranian legislature's national security and foreign policy committee defended his nation's atomic record in remarks reported on Monday by Mehr News.

"In addition to permitting numerous inspections, the Islamic republic has answered all questions and (cleared up) ambiguities, and has always welcomed proposals to hold negotiations, so now the P-5+1 should take confidence-building steps,” Hossein Naqavi-Hosseini stated, referring to Germany and permanent U.N. Security Council members China, France, Russia, the United Kingdom and the United States.

“The [P-5+1] group should lift sanctions as the first step toward confidence-building,” the lawmaker said (Mehr News Agency, July 9).

Israeli Prime Minister Benjamin Netanyahu and European Commission chief Jose Manuel Barroso on Monday conferred on "Iran's effort to arm itself with nuclear weapons," AFP quoted a Netanyahu press release as stating.

Israeli President Shimon Peres told Barroso: "We appreciate Europe's position concerning the Iranian nuclear program."

"Iran is the headquarters of world terrorism and the world must stop the Tehran regime from obtaining nuclear weapons," the release quotes Peres as saying (Agence France-Presse/Yahoo!News, July 10).

The German firm Herrenknecht is apparently providing Iran with equipment for constructing underground passageways, and it is unclear whether the gear could support the nation's atomic sites, the Jerusalem Post reported on Monday (Weinthal/Kiewel, Jerusalem Post, July 9).

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