Business | Oil & Gas
US action fails to dent Iran income
Undaunted by US pressure, Iran's finest oil minds are manoeuvring their way around efforts to restrict the oil producer's export revenue.
- Reuters
- Published: 01:04 February 8, 2008
London: Undaunted by US pressure, Iran's finest oil minds are manoeuvring their way around efforts to restrict the oil producer's export revenue.
Leading attempts to isolate the country over its atomic energy programme, Washington last year slapped sanctions on two Iranian banks and is pressing for a third set of punitive UN measures.
Hojjatollah Ghanimifard of the state-run National Iranian Oil Company (NIOC) said yesterday the world's third biggest oil exporter would always find a way to carry on the trade that earned the country $70 billion last year. "Iran has worked around America's pressure on our oil transactions," said Ghanimifard, international affairs director at NIOC. "We are disarming those who made threats against us."
As a first step, Tehran by last autumn had cut all ties with the US dollar. Washington in turn leant harder on international banks.
Some European banks bowed to the pressure by refusing to open letters of credit - a standard form of payment guarantee in the oil trade. "That did not hurt us. We found other banks," said the official.
Alternatives
He added Iran had shifted away from using some European banks to ones in other regions and had also begun using different methods of payment.
"We've changed the list of acceptable banks we deal with and are using more non-traditional means of arranging payment."
He declined to identify the new banks or those who had had stopped dealing with Iran. "We prefer not to memorise the names of those who are trying to hurt us," he said. "Who's getting hurt? We are not losing one single cent of our income. This is money they have lost," he said.
Letters of credit are not the only solution. Other payment instruments are available to Iran, Ghanimifard said. Some bankers in the Middle East have said it was also possible to use front companies that are not banks as guarantors.
At stake are payments for oil exports that averaged 2.45 million barrels per day. Around 70 per cent rolled into Asia, with most of the rest destined for Europe and Africa.
Credit line: Those who stopped
Industry sources say major banks from France - Calyon, the investment banking arm of Credit Agricole, Societe Generale, BNP Paribas - Switzerland's UBS and Germany's Deutsche Bank, as well as Chinese banks have withdrawn credit lines.
A buyer of crude or refined oil products is usually required to open a letter of credit from a top bank with which the seller does business to guarantee payment. The bank charges a fee and can net a share of the oil revenues and the NIOC official said banks would miss the business.
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