US Oil Companies Set to Be Sidelined When Iran Sanctions Are Lifted

American companies such as  ExxonMobil and Chevron will be left on the sidelines when sanctions are lifted.

European oil companies will get carte blanche to enter Iran when the U.S. and European Union sanctions against the country are lifted, but American companies such as ExxonMobil and Chevron will be left on the sidelines, Platts reports.

That is because only the nuclear-related sanctions on Iran's oil sector are scheduled to be lifted under the Joint Comprehensive Plan of Action (JCPOA), while the U.S. trade embargo that prevents transactions in American dollars will remain intact, Platts explains in a December 29 feature.

Foreign companies not explicitly barred by the embargo if their proposed transactions involve the U.S. banking system will also be sidelined, and U.S. upstream and downstream technologies that could be used in Iran will be restricted.

Kaveh Miremadi, a Washington-based sanctions lawyer for Price Benowitz, says, "Most companies I speak with in the United States are shocked to learn that they will continue to be prohibited from doing business with Iran while their counterparts in Europe and Asia are currently sending business envoys to Tehran.

"They see it as fundamentally unfair, which I believe contributes to their overall confusion about the JCPOA's sanctions relief."

Washington has promised to soon issue guidance documents to companies wishing to invest in Iran, and the U.S. Treasury's Office of Foreign Assets Control (OFAC) is reportedly on hand to clarify any questions.

The JCPOA has stated that foreign entities owned or controlled by U.S. persons will be authorized by the OFAC to engage in transactions with Iran, but Miremadi urges the Treasury to outline the scope of these authorizations.

He says, "Without any actual text to work with, U.S. companies are confused about the level of engagement their foreign subsidiaries, partners, or affiliates will be able to have with Iran and whether their U.S. person-employees will be allowed to take part in such transactions with Iran."

Miremadi worries that many potential players may choose not to do business with Iran until many of the regulatory issues are clarified.

Meanwhile, Iran is looking forward to a production windfall when the sanctions are lifted, and earlier this year it was reported that they were already ramping up activity.