The United States Department of the Treasury has included a petrochemicals trading firm based in Mumbai among an “international network” of eight companies allegedly “involved in the sale of hundreds of millions of dollars’ worth of Iranian petrochemicals and petroleum products to end users in South and East Asia”.
This is possibly the first instance of US sanctions against Iran targeting an India-based company in recent years. The Department of the Treasury’s action comes days after External Affairs Minister S Jaishankar visited the US for talks with senior Biden Administration officials including Secretary of State Antony Blinken and National Security Advisor Jake Sullivan.
In its list of “Specially Designated Nationals” (SDNs), the Department of the Treasury’s Office of Foreign Assets Control (OFAC) added an update on September 29, including eight new entities. Among them is Tibalaji Petrochem Private Limited, which the Department of the Treasury note says is “Subject to Secondary Sanctions”. The listing gives an address in Mumbai’s Bandra Kurla Complex for the company, which it says was established in 2018.
On its website, Tibalaji Petrochem Private Limited says it is “a growing petrochemical trading company” that has expanded “from a small trading house to one of the reputed leading distributors of chemical, solvent, fertilizer and polymer products in India”.
Besides the eight companies in the updated list of OFAC designations, the statement said that “the Department of State is designating two entities based in the People’s Republic of China (PRC), Zhonggu Storage and Transportation Co. Ltd. and WS Shipping Co. Ltd., for their involvement in Iran’s petrochemical trade”.
The statement issued on September 29 says “India-based petrochemical company Tibalaji Petrochem Private Limited has purchased millions of dollars’ worth of Triliance-brokered petrochemical products, including methanol and base oil, for onward shipment to China.”
Triliance Petrochemical Co. Ltd., described by the Department of the Treasury as “a critical component of Iran’s petroleum and petrochemical sectors”, is a Hong Kong-based broker with branches in Iran, the United Arab Emirates, China, and Germany.
Triliance was designated by the OFAC in January 2020 for “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)”, which is itself a sanctioned entity.
According to the Treasury Department statement, Triliance, “which brokers the sale of Iranian products to foreign purchasers, has purchased millions of dollars’ worth of Iranian petrochemical and petroleum products from Iran-based petrochemical brokers Iran Chemical Industries Investment Company and Middle East Kimiya Pars Co., which were ultimately shipped to India”.
Triliance, the statement says, “relies upon intermediary front companies to effectuate the sale of Iranian products to purchasers in South and East Asia”.
The statement said that “as a result of (the) action, all property and interests in property of these targets that are in the United States or in the possession or control of US persons must be blocked and reported to OFAC”. Also, “any entities that are owned, directly or indirectly, 50 per cent or more by one or more blocked persons are also blocked”.
OFAC regulations generally prohibit all dealings by US 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” and, “unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to US sanctions”.
The statement said that “the ultimate goal of sanctions is not to punish, but to bring about a positive change in behaviour” of the designated entities.
Iran was among India’s top energy suppliers until May 2019, when New Delhi decided to stop purchasing Iranian oil due to the threat of attracting US sanctions.
Commercial ties between India and Iran have been traditionally dominated by Indian imports of Iranian crude oil. In 2018-19, India imported US$ 12.11 bn worth of crude oil from Iran.
However, following the end of the Significant Reduction Exemption (SRE) period on 2 May 2019, India suspended the import of crude from Iran. The bilateral trade during 2019-20 was $4.77 billion, a decrease of 71.99% as compared to the trade of $17.03 billion 2018-19.
In 2015, Western powers led by the United States had entered into a nuclear deal with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), under which Tehran scaled back its nuclear programme in return for the lifting of sanctions.
In 2018, President Donald Trump withdrew from the deal, and heavy American sanctions were imposed on the Iranian economy. Iran retaliated by cranking up its nuclear programme, including the enrichment of uranium beyond the limits put by the deal.
President Joe Biden’s Administration has been trying to revive the deal, but progress has been slow, in part because of the hard line taken by the Iranian government.
Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E Nelson said that the US remains “committed to severely restricting Iran’s illicit oil and petrochemical sales”, and that “so long as Iran refuses a mutual return to full implementation of the Joint Comprehensive Plan of Action, the United States will continue to enforce its sanctions on the sale of Iranian petroleum and petrochemical products.”
The Treasury statement said: “As Iran continues to accelerate its nuclear program in violation of the JCPOA, we will continue to accelerate our enforcement of sanctions on Iran’s petroleum and petrochemical sales under authorities that would be removed under the JCPOA. These enforcement actions will continue on a regular basis, with an aim to severely restrict Iran’s oil and petrochemical exports. Anyone involved in facilitating these illegal sales and transactions should cease and desist immediately if they wish to avoid US sanctions.”