Billions of dollars of deals signed by international companies are under threat

Billions of dollars of deals signed by international companies with Iran are under threat after the US president, Donald Trump, announced he was pulling out of a “rotten” nuclear deal with Tehran.

Iran’s agreement in 2015 to curb its nuclear ambitions led to the US easing crippling sanctions, in a rapprochement in which big firms seized an opportunity to invest in a global top-30 economy with a population of about 80 million.



Within a year, landmark deals were being signed in sectors including oil and gas, aviation and the automotive industry, with firms in France, the UK and Germany among the quickest to invest.

EU moves to protect European firms from US sanctions on Iran Read more

Shares in several large Iranian investors, including Airbus, Renault and the Peugeot owner, PSA, fell in early trading on Wednesday amid concern about the impact on trading, while oil prices reached a three-and-a-half-year high.

A new regime of sanctions means restrictions are expected on many things, from exports of US machine parts to loans made in dollars.

Companies with any exposure to Iran will also have to tread very carefully or face the prospect of huge fines.



Oil and gas

In December 2016, Royal Dutch Shell signed a provisional agreement to develop the Iranian oil and gas fields in South Azadegan, Yadavaran and Kish. While drilling is still a long way off, sanctions are likely to put on ice any preparations already being made.

The French oil firm Total is in a similar boat, having agreed to help Iran develop the world’s largest gas field, South Pars. Shell and Total were issued licences to build petrol stations in Iran, too.

In 1935, BP became the first company to extract petroleum from Iran, in its previous incarnation as the Anglo-Persian Oil Company. The British oil firm did not rush in alongside Total and Shell, choosing instead to send in staff on a fact-finding mission. However, it could still be affected.

Late last year BP agreed to sell three North Sea gas fields to Serica Energy for $400m (£294m). One of the fields, Rhum, is co-owned by a subsidiary of Iran’s national oil company. That means a licence is required from the US Office of Foreign Assets Control (OFAC) to allow US nationals or companies to work on it.

If Serica cannot obtain that licence because of new sanctions, it faces the risk of being unable to call on US-owned companies, in the event, for instance, of a fire or oil spill, severely restricting its emergency options.

The sale is not yet complete and it is unclear whether it will go ahead now. “We take care to ensure we always comply with applicable sanctions,” BP said.

Serica issued a statement as its shares fell by more than 5% in response to Trump’s announcement.

It said: “The company is evaluating the implications of these statements and how they relate to the Rhum field in which th‎e Iranian Oil Company (U.K.) Limited is a 50% partner. We will update the market, as appropriate, in due course.”

There is an upside to the tension for oil companies, though. Sanctions on Iran are likely to push up oil prices, which have been persistently low amid a global supply glut. Brent crude oil reached $77.20 in early trading in London on Wednesday, the highest level since November 2014.

Aviation

Two of the big beasts of aviation, Airbus and Boeing, had deals in place worth $39bn to sell aircraft to Iran. The US treasury secretary, Steven Mnuchin, said on Tuesday that the companies’ licences to export to Iran would be revoked.

The largest deal was an agreement by IranAir to buy 100 aircraft from Airbus. Although Airbus is European, more than 10% of parts and labour used to build its planes come from the US. The company employs about 10,000 people in the UK, at Filton and Broughton.

Facebook Twitter Pinterest IranAir had an agreement to buy 100 aircraft from Airbus. Photograph: Vahid Salemi/AP

An Airbus spokesman said jobs would not be affected. “Our [aircraft order] backlog stands at more than 7,100 aircraft, this translates into some nine years of production at current rates. We’re carefully analysing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations. This will take some time.

“From what we can see today, there is no foreseeable impact on the production at Broughton plant in Wales due to that announcement, which we should be able to mitigate in the timeframe mentioned above.”

British Airways resumed direct flights between London Heathrow and Tehran in 2016 after four years, following the lifting of sanctions. The Guardian has approached the parent company, International Airlines Group, for comment on whether the route could be affected.

Automotive

Several partnerships involving European carmakers may come screeching to a halt due to fresh sanctions, with French firms particularly badly affected.

Renault and PSA, which owns Citroën, Peugeot and Vauxhall, saw their shares fall on the Paris stock exchange on Wednesday as investors digested the impact.

When sanctions were lifted, Renault of France signed a $778m deal to make 150,000 cars a year outside Tehran. PSA signed agreements with local partners to produce hundreds of thousands of vehicles in Iran.

In PSA’s case there was a significant rise in sales in a region where it was once the leading carmaker. PSA has said it hoped the EU could reach a common position on Trump’s new sanctions, without saying what that might be.

PSA was producing cars in Iran as part of a joint venture with a local firm, Iran Khodro. The Tehran firm also signed a deal last year with the trucks division of Mercedes-Benz, owned by Daimler of Germany, with car production slated to follow this year. The German auto firm Volkswagen had also restarted exports to Iran.

Others

Vodafone is working in partnership with Iranian firm HiWEB to roll out and modernise the country’s internet infrastructure, including broadband and mobile internet services. A company spokesperson said Vodafone was “monitoring the situation”.

While not likely to be directly affected, engineer Rolls-Royce stands to lose out as a result if, as expected, Airbus loses its 100-aircraft order with IranAir, because Rolls-Royce is the primary provider of engines to many of those aircraft models.