Europe’s economy could suffer from the refusal of European companies to work with Iran under pressure from the U.S. sanctions on Tehran, Rosneft Oil Company’s chief executive Igor Sechin said at the Eurasian Economic Forum in Verona, Italy, on Thursday.
Sechin, who has been on the U.S. list of sanctioned individuals in his personal capacity since 2014, criticized in his speech at the forum what he called “unilateral” sanctions on countries, saying that such sanctions have turned into a routine instrument in the hands of one country.
Referring to the sanctions on Iran and European companies quitting projects to avoid coming under secondary sanctions, Sechin said, as quoted by Russia’s TASS news agency:
“Earlier, we noted the fact that Total has left one of the largest gas projects in the world South Pars-11 with significant losses. The effect from European companies refusing to work with Iranian partners, including, perhaps, a complete ban of Iranian oil imports from November 5, 2018, could have the most serious consequences for the European economy.”
Meanwhile, the European Union (EU) is working to set up a payment mechanism for trade with Iran, and that mechanism should be legally in place by November 4, when the U.S. sanctions on Iran return, three EU diplomats told Reuters on Wednesday, noting that the mechanism won’t be operational until early in 2019.
Still, the biggest European companies—not only in oil and gas but in other industries as well—are not taking any chances and are withdrawing from Iran due to the U.S. sanctions. The EU’s oil imports from Iran are also expected to cease as refiners are not eager to open themselves up to risk.
Iran, for its part, said earlier this week that its oil revenues in the first half of the current calendar year that began in March were 25 percent higher than expected in Iran’s budget. Although Iran’s exports have dropped in recent months, oil prices have risen.
Iran’s exports of crude oil and condensate peaked in June at about 2.7 million bpd, up by 300,000 bpd from the average during the first four months of the year before the May announcement of sanctions, the EIA said this week, quoting data from ClipperData. To compare, Iran’s crude oil and condensate exports fell to 1.9 million bpd in September.