Update on Executive Order 13574 – Iran Sanctions

May 31, 2011

On May 24, 2011, the U.S. Department of State (“State”) announced that it had decided to impose sanctions on seven companies under the Iran Sanctions Act of 1996, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”) for those companies’ “activities in support of Iran’s energy sector.”1

The sanctioned companies are: Petrochemical Commercial Company International (Jersey/Iran), Royal Oyster Group (UAE), Speedy Ship (UAE/Iran), Tanker Pacific (Singapore), Ofer Brothers Group (Israel), Associated Shipbroking (Monaco), and Petróleos de Venezuela (PDVSA) (Venezuela). Below is a brief explanation of the sanctions imposed and the reason for the imposition of those sanctions, as expressed by State.

Petrochemical Commercial Company International; Royal Oyster Group; and Speedy Ship: State determined that “[t]hese firms are among the largest current suppliers of refined petroleum products to Iran and all three regularly engaged in deceptive practices in order to ship these products to Iran and evade U.S. sanctions.” State has imposed sanctions prohibiting them from U.S. foreign exchange transactions, U.S. banking transactions, and all U.S. property transactions.

Tanker Pacific, Ofer Brothers Group, and Associated Shipbroking: State has sanctioned these companies “for their respective roles in a September 2010 transaction that provided a tanker valued at $8.65 million to the Islamic Republic of Iran Shipping Lines (IRISL), an entity that has been designated by the United States, and the European Union for its role in supporting Iran’s proliferation activities.” Tanker Pacific and Ofer Brothers Group are now barred from securing financing from the Export-Import Bank of the United States, from obtaining loans over $10 million from U.S. financial institutions, and from receiving U.S. export licenses. Associated Shipbroking is now prohibited from U.S. foreign exchange transactions, U.S. banking transactions and all U.S. property transactions.

Petróleos de Venezuela (“PDVSA”): State determined that PDVSA has delivered at least two cargoes of reformate, a blending component that improves the quality of gasoline, to Iran between December 2010 and March 2011, worth approximately $50 million. The sanctions imposed prohibit PDVSA from competing for U.S. government procurement contracts, from securing financing from the Export-Import Bank of the United States, and from obtaining U.S. export licenses. “These sanctions do not apply to PDVSA subsidiaries and do not prohibit the export of crude oil to the United States.”

CISADA has serious consequences for non-U.S. businesses including energy, banking, shipping, insurance and others. If you have any questions or concerns about CISADA, please contact Bruce G. Paulsen (212-574-1533).


1 This memorandum provides supplemental information with respect to our memorandum issued on May 26, 2011, entitled “Executive Order 13574 – Iran Sanctions” as well as a correction with respect to the sanctions against Tanker Pacific.  Tanker Pacific was not sanctioned in connection with supplying or transporting refined petroleum products to Iran, but rather was sanctioned as set forth above.


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