Multinationals’ Dreams of Hefty Iran Contracts Have Withered
(Bloomberg) -- The Trump administration reintroduced punitive measures Monday against Iran’s all-important energy and shipping sectors. Although Iran and the other parties to the 2015 nuclear deal (France, Germany, the U.K., the European Union, China and Russia) remain committed, fear of violating the sanctions and losing access to the world’s biggest economy has forced major multinationals in and outside the U.S. to forgo lucrative projects in Iran.
Here are some of the heavy hitters that have pulled out or put plans on hold:
U.S.-based Boeing Co. had reached a $3 billion agreement with Iran’s Aseman Airlines for 30 737 Max jets, and a $16.6 billion deal with national carrier Iran Air for 80 aircraft.
Earlier this year, Treasury Secretary Steven Mnuchin said the company’s export licenses to Iran will be revoked and in June, Boeing said it would follow the government’s lead.
Airbus Group SE, ATR
Airbus had won a $19 billion order for 100 planes. But the European group was subject to U.S. export restrictions to Iran because more than 10 percent of the parts on its jets contain U.S.-made components. Only three of the jets were delivered before President Donald Trump withdrew from the nuclear deal in May.
Iran also ordered 20 regional jets from ATR, a joint venture between Airbus and Leonardo SpA. Twelve were delivered and the company is now in talks with other possible customers to reallocate the remaining eight.
General Electric Co.
Last year, affiliates of GE’s oil and power-generation divisions won orders worth about a combined $18 million, according to a regulatory filing. And it had been preparing for as much as $150 million in bids for pipelines and compressors, the Wall Street Journal reported.
Earlier this year, the company said it would “adapt” its activities to conform with changes in U.S. law. In May, the Journal reported that GE planned to end sales of oil and natural gas equipment to Iran. GE Power, the company’s electricity-generation unit, shut a small office in Tehran, it added.
Germany’s Siemens AG had signed a contract worth at least 1.5 billion euros ($1.6 billion) to build rail coaches and upgrade train tracks in Iran.
In August, the company said it was ensuring it follows relevant international export-control restrictions and "all other applicable laws and regulations, including U.S. secondary sanctions.” The same month, Richard Grenell, the U.S. ambassador to Germany, said Siemens had informed him it was pulling out of Iran to comply with U.S. sanctions.
France’s Total SA signed a $5 billion, 20-year agreement along with China National Petroleum Corp. to develop phase 11 of Iran’s South Pars offshore gas field. Total had been the first major Western oil corporation to sign a production deal with Iran following the nuclear accord.
In August, Total SA said it failed to secure a waiver from the U.S. to exempt that project from sanctions and had notified Iran it planned to withdraw. China’s CNPC, which has a 30 percent stake in South Pars, has the contractual right to take over the field.
France’s PSA Group, the maker of Peugeot and Citroen vehicles, and its Iranian partner had agreed to invest 400 million euros ($474 million) to upgrade a Peugeot carmaking factory. In June, the French automaker said it has begun closing down its joint ventures with Iranian carmakers Iran Khodro Co. and Saipa. PSA said at the time that is was asking the U.S. for a waiver, with the support of the French government.
In July, a French official told Bloomberg that the U.S. rejected waiver requests from European governments including France.
French carmaker Renault SA initiated a joint venture to build 150,000 vehicles a year in Iran. In July, Renault Chief Operating Officer Thierry Bollore said operations would probably be put on hold to comply with U.S. sanctions and the company would look at business opportunities in Africa to “offset the missed opportunities.”
Renault has had to significantly reduce its business in Iran though it’s doing everything it can to keep a presence in the country, Renault CEO Carlos Ghosn told Bloomberg TV in October.
Maersk Oil, owned by Total, had held talks with Iran to develop its South Pars gas field’s oil layer and Maersk Line had announced its return to Iran with a new container service. The company also had offices in Tehran, Bandar Abbas and Bushehr, employing a total staff of 12.
In a statement in May, the CEO of A. P. Moller-Maersk A/S said it would “monitor the developments to assess any impact on our activities."
A plan by France’s Bouygues SA industrial group and Aeroports de Paris to invest $2.8 billion in the Tehran airport was scrapped last year due to difficulties securing financing, according to press reports. Even before the Trump administration withdrew from the accord, most big banks had shied away from resuming business with Iran for fear of contravening separate U.S. restrictions, complicating project financing.
Air France-KLM Group
The airlines, which had reintroduced services to Tehran about two years ago, stopped serving the Iranian capital in September. It said the decision was related to business performance and wasn’t directly tied to U.S. sanctions.
British Airways, IAG SA’s flagship brand, also terminated its London-to-Tehran operation in September, saying it’s “not commercially viable.” The retreat of foreign carriers from Iran has dried up the flow of business travelers.