FDD Welcomes Reports that Russia’s Lukoil to End Gasoline Shipments to Iran

Joins list of Iran's energy partners bowing out of Iranian market

Washington, D.C. (April 7, 2010) – The Foundation for Defense of Democracies welcomed reports that Russia's Lukoil will join the list of energy companies that have ended gasoline shipments to Iran.

FDD has provided leading research and analysis in support of strong, broad-based energy sanctions, including gasoline, natural gas, and oil sanctions, as part of a comprehensive strategy to end the Iranian regime's pursuit of nuclear weapons.

“This decision by Lukoil to leave the Iranian market adds to the evidence that the push for broad-based sanctions targeting Iran's energy sector — including steps taken to make it more difficult for Iran to import gasoline, acquire key energy technology, and attract investment for its energy sector — is already having a major impact,” said FDD Executive Director Mark Dubowitz.

“Significantly, it's not only Iran's gasoline suppliers exiting the market, but also energy investors, banks, technology providers, and insurers who also face growing pressure to decide between doing business with the Iranian regime and continuing their business relationships in the lucrative U.S. market,” Dubowitz said. “In addition, many energy companies are currently in violation of the Iran Sanctions Act and should be concerned that any one of them could be the first energy company sanctioned under this existing law. That would send a shockwave across the energy industry.”

The Iran Sanctions Act (formerly the Iran-Libya Sanctions Act of 1996) prohibits the investment of more than $20 million in one year in the Iranian energy sector. Both the House and the Senate have advanced legislation to expand this legislation to impose sanctions on companies supplying gasoline to Iran and on the insurance, reinsurance, financing, technology, and shipping companies that facilitate this trade. On December 15, 2009, the House approved the Iran Refined Petroleum Sanctions Act (IRPSA) by a vote of 412-12. On January 28, 2010, the full Senate approved the Dodd-Shelby Comprehensive Iran Sanctions, Accountability, and Divestment Act (S.2799), which combines several pieces of sanctions legislation, including the Senate version of IRPSA. The House and Senate bills will be reconciled in conference committee.

Since the push for strengthened sanctions began, seven of Iran's major gasoline suppliers — BP, Vitol, Trafigura, Glencore, Shell, Reliance, and Lukoil — have reportedly promised to end their gasoline supplies to Iran. March 2010 figures compiled by FDD's Iran Energy Project still show Switzerland's Vitol, Russia's Lukoil, France's Total, and Malaysia's Petronas delivering gasoline to Iran. In the past, Iran reportedly has received gasoline from Kuwait's Independent Petroleum Group as well as the Chinese companies Zhuhai Zhenrong Corp., ZhenHua Oil, and China National Petroleum Corporation.

The threat of sanctions has caused numerous banks to stop underwriting gasoline sales to Iran, and three insurance companies, Munich Re, Allianz, and Hannover Re, have also exited the market, increasing the difficulties that Iran will have importing the gasoline it needs (up to 40% of its total consumption) to meet its domestic requirements. A number of energy companies are also reconsidering their investments in the Iranian energy industry.

For more information on FDD's Iran Energy Project, and the companies involved in Iran's energy industry, please visit IranEnergyProject.org or contact Judy Mayka at [email protected].

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