UK: New Limitations For Commodities Trade Following Latest EU Sanctions Against Iran

As indicated in our update European Union extends sanctions against Iran Council Regulation (EU) No 1263/2012 (1263/2012) has introduced measures which significantly restrict trade with Iran across a broad range of industries through increasing the list of equipment subject to restrictive measures and by expanding the finance and payment prohibitions. This update focuses on the specific restrictive measures relating to the energy, metal and maritime industries. Please see our dedicated shipping and finance updates for further information.


One of the most significant changes imposed by 1263/2012 is the new provision relating to graphite and other unfinished or raw materials. A new Article 15a imposes a prohibition on the sale, supply, transfer or export to an Iranian person, entity or body, or for use in Iran, of graphite and raw or semi-finished materials listed in Annex VIIB, which includes specified grades/types of metals identified by their HS number.

As with the other industries subject to restrictive measures, there is also a prohibition on the provision of technical or financial assistance or brokering services in respect of the listed material.

There is an exemption for contracts concluded prior to 22 December 2012, which may be executed until 15 April 2013.

Natural gas

Another area where 1263/2012 imposes new measures (as opposed to extending existing measures) is in relation to natural gas. A new Article 14a prohibits the import, purchase, transport or "swap" of natural gas from Iran or of Iranian origin. There is also a prohibition on the provision of finance or financial assistance, including derivatives, as well as insurance and reinsurance for the export, purchase, transport or swap of natural gas from Iran or of Iranian origin.

An exemption applies to co-mingled natural gas, enabling the import, purchase or transport of natural gas exported from a State other than Iran where the exported gas has been combined with gas of Iranian origin provided that the comingling takes place outside of Iran and outside the remit of the Iranian state.

A further exemption allows nationals of EU member States to purchase natural gas within Iran for residential civilian purposes or for diplomatic missions.

Oil and gas industry

The scope of the provisions prohibiting the sale of key equipment used in the oil and gas industry including the exploration, production and refining of crude oil and natural gas and the liquefaction of natural gas, has been expanded in a revised Article 8. As previously there are also prohibitions against providing, directly or indirectly, technical or financial assistance or brokering services to any Iranian person, entity or body, or for use in Iran in respect of any of the listed items (which now applies to the extended Annex VIA).

Annex VIA sets out an extended list of prohibited equipment which cannot be sold, supplied, transferred or exported to Iran including casing, tubing, drill pipes and line pipes (of a type used in the exploration of oil and gas) and specialised steel or iron containers for compressed or liquefied gas.

There are various exemptions to the additional prohibitions.

  1. Contracts concluded before 27 October 2010 for the sale, supply, transfer or export of the key equipment and technology for use in the oil and gas industry, which was not previously designed under Annex VI, may be executed until 15 April 2013.
  2. Contracts for the sale, supply, transfer or export of the key equipment and technology for use in the oil and gas industry which was not previously designed under Annex VI, and which are required to be executed as a result of obligations arising from an agreement concluded prior to 26 July 2010 and which relate to investment in Iran made before that date, may also be executed until 15 April 2013.
  3. Contracts concluded before 16 October 2012 for the sale, supply, transfer or export of the key equipment and technology for the oil and gas and petrochemical industry listed in the original Annex VI may be executed up to 15 April 2013.
  4. Contracts in respect of the key equipment and technology for the oil and gas and petrochemical industry listed in the original Annex VI which are required to be performed as a result of obligations arising from an agreement concluded prior to 26 July 2010 (for oil and gas industry) or 23 January 2012 (for petrochemicals industry) and relate to an investment in Iran made before those respective dates, may be executed up to 15 April 2013.
  5. Contracts concluded before 24 March 2012 for the key equipment and technology used in the petrochemical industry (listed in Annex VI) may be executed up to 15 April 2013.
  6. Contracts for key equipment and technology used in the petrochemical industry which are required to be performed as a result of obligations arising from an agreement concluded prior to 23 January 2012 and which relate to investment in Iran made before that date may also be executed until 15 April 2013.
  7. Any obligations arising from contracts concluded before the relevant dates (listed above) are not prohibited from being satisfied.
  8. It is noted that the provision of technical assistance exclusively for the installation of equipment and technology which may be sold, supplied, transferred or exported to Iran is not prohibited, provided that this relates to contracts concluded prior to the relevant date.

Any person/entity who wishes to enter into a transaction or to provide technical assistance in reliance on one of the 8 exemptions listed above must notify the relevant competent authority (HM Treasury, in the United Kingdom) 20 working days in advance of the transaction.

Maritime industry

As with the amendments discussed above in respect of the oil and gas industry, the equipment and technology which is subject to prohibitions has been increased and is set out in a new Annex VIB. It is prohibited to sell, supply, transfer or export the key naval equipment and technology listed in that Annex, directly or indirectly to any Iranian person, entity or body or for use in Iran. The listed items include equipment and technology for ship building, maintenance, refit, and construction of oil tankers.

As with the measures affecting the oil and gas industry, the provision of technical or financial assistance or brokering services relating to the provision, manufacture, maintenance and use of the items listed in Annex VIB is also prohibited.

There is an exemption to allow existing contracts entered into before 22 December 2012 to be fulfilled, provided that they are executed by 15 February 2013. A further exemption exists in relation to the non-Iranian owned or controlled vessels which have been forced into Iranian territorial waters or ports because of force majeure.

Please see our dedicated shipping update "Shipping industry feels force of EU sanctions against Iran" for further information on measures which affect the maritime industry more generally.


As is evident from the discussion above, 1263/2012 significantly extends the scope of the restrictive measures against Iran, introducing widespread prohibitions on a variety of sectors. This includes, for the first time, significant prohibitions affecting the metal industry and what effectively amounts to a blanket ban in the dealings of financial institutions. As with all trades potentially affected by the sanctions regime it is important to analyse each trade on a case-by-case basis to assess whether that particular trade is permitted and whether any notifications to the relevant competent authority need to be made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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