State Department Sanctions Belarussian Energy Company For Doing Business With Iran

Yesterday, the U.S. Department of State announced that the U.S. will impose sanctions on Belarusneft, a state-owned Belarusian energy company, under the Iran Sanctions Act (ISA) of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, for its involvement in the Iranian petroleum sector. According to the State Department, Belarusneft entered into a $500 million contract with the NaftIran Intertrade Company in 2007 for the development of the Jofeir oilfield in Iran.

The sanctions that will be imposed on Belarusneft include:

1. Denial of U.S. Export-Import Bank assistance in approving, guaranteeing, insuring, extending credit, or participating in the extension of credit regarding the export of any goods or services to Belarusneft;

2. Denial of U.S. government licenses or other approvals required to export or reexport goods or services to Belarusneft;

3. Prohibition of loans or credits to Belarusneft by U.S. financial institution totaling more than $10 million in any twelve-month period, unless the loans or credits are provided to relieve human suffering; and

4. Prohibition on the U.S. Government procuring, or entering into any contract for the procurement of, any goods or services from Belarusneft.

Because Belarusneft is a subsidiary of Belneftekhim and was already to subject to OFAC sanctions, the sanctions imposed under the ISA and CISADA are not likely to impact most U.S. companies. However, as a State Department spokesman indicated, this announcement "sends a message to our partners in Europe as well that this is a company that we've decided to sanction. And I'm sure they have access or would seek access into European markets." 

Because several members of Congress have expressed concern over the Obama Administration's implementation of CISADA, the State Department is likely to announce further Iran-related sanctions in the coming months.

For example, in response to the State Department's announcement Representative Ileana Ros-Lehtinen (R-FL), Chair of the House Foreign Affairs Committee, said that that "the conspicuous absence of any sanctions on Russian and Chinese companies, despite their longstanding involvement in Iran, is deeply troubling." She also noted that in addition "to going after the low-hanging fruit like Belarusneft, the State Department must impose sanctions against energy giants that continue to do business with Iran.”