While oil and gas operators expect that sanctions will be lifted by the end of March, when negotiations between Iran and the P5+1 countries (the US, UK, Russia, China, and France, plus Germany) are due to close, there are likely to be significant delays, and a continued risk of prosecution for breaches, Pinsent Masons said in a statement.
Negotiations are underway to completely or partially remove sanctions that were put in place to encourage Iran to stop its military nuclear program. The US imposed a range of trade sanctions in 2010, while the EU banned the import, purchase and transport of Iranian crude oil as well the construction of oil tankers for the country.
Oil and gas expert George Booth of Pinsent Masons said: "With the March deadline fast approaching we are seeing more oil and gas operators getting their ducks in a row. Irrespective of price volatility, we're seeing many organise finance, approach shareholders and engage with third party suppliers in the expectation that the sanctions will be lifted. They want to put themselves in the best possible position to secure access to Iranian resources."
“Setting aside the current trading price, the long term view is that Iran is still likely to be central to the future of global natural resources. European oil and gas players, particularly small and nimble players, are keenly tuned in to the negotiations as they unfold.”
"However, it is critical to remember that sanctions will not simply vanish even if an agreement to lift them is reached. This is just the start of the process and it will take time to unravel the complex web of restrictions on trade which have been in place for several years. Breaches can still be penalised in the transition phase and people need to be alive to that."
Detailed due diligence is still needed to safeguard against breaches of the sanctions, Booth said.
"Businesses should avoid signing on the dotted line and firming up any arrangements until it is clear that it is safe to do so," he said.