Wednesday, Jan 18, 2012

--EU to review embargo date half way through

--EU likely to put restrictions on petrochemical imports

--EU set to target central bank, still discussing extent of measures

--More discussions Thursday on Iran sanctions details

(Adds details, in the second, fourth, seventh, ninth, 12th through 14th and 16th paragraphs.) 


 
   By Laurence Norman 
   Of DOW JONES NEWSWIRES

BRUSSELS (Dow Jones)--The European Union is coalescing around a July 1 start for its crude-oil embargo on Iran, several diplomats said Wednesday, but the date for imposing the sanctions will be reviewed half way through the transition period.

The measures would represent the most-serious ratcheting up of EU pressure against Iran thus far over its nuclear program. France, which initially proposed the sanctions, is one of several member states who accuse Iran of seeking to develop nuclear weapons, a charge that Tehran denies.

While a senior Greek government official on Tuesday said Athens wanted an eight-month transition to give Greece time to secure new crude-oil supplies and the French government has been pushing for a shorter three-month transition, the diplomats said a July 1 start date looks increasingly likely.

"We are heading towards July 1," one diplomat said. This was the compromise date suggested by the EU's foreign-service unit last Friday.

The EU is expected to finalize details of the embargo and other sanctions--including the timeframe for their implementation--at a January 23 meeting in Brussels. The sanctions may not be fully signed off on until EU heads of government meet in Brussels on January 30.

Member states have also agreed there should be a review half way through the transition period to see if the embargo should go ahead as planned, the diplomats said. The review would take into account the impact of the sanctions on individual countries and its effect on international oil markets and prices.

However, one diplomat said the embargo date would be delayed only if member states agreed on that unanimously. The source said it would be considered by some countries only if the embargo had a major impact on a member state's access to energy.

Greece, Italy and Spain are the three countries most heavily dependent on Iranian oil. Greece's dependence has grown in recent months because of its economic difficulties, with Tehran offering favorable credit terms to Greek oil importers.

Italian officials have said they will back an embargo, if agreed, but have insisted that the EU agree to an exemption on oil imports used to repay Iran's debts, worth around $2 billion, to Italian oil giant Eni SpA (E, ENI.MI). Three of the sources said this demand was set to be accepted and the only debate left was over the wording of the exemption.

Two diplomats also said the EU was likely to impose a ban on imports of Iranian petrochemical products and would probably ban exports of key technology intended for Iran's petrochemical industry. European investment and financing of Iran's petrochemical sector would also likely be banned.

However, the sources said there is still debate about what exemptions to allow and when the petrochemical restrictions should take effect.

Member-state officials will meet in Brussels Thursday afternoon to discuss further details of the sanctions.

Earlier Wednesday, the U.K. foreign office said in a statement that EU foreign ministers will debate a package of measures "to expand and strengthen EU sanctions against Iran, including an oil embargo and further restrictions on finance, petrochemicals and gold."

In November, the U.S. imposed sanctions on Iran's petrochemical sector--a key source of exports. That forced many international buyers to use barter to purchase the products and led South Africa's Sasol Ltd. (SSL, SOL.JO) to consider exiting an Iranian petrochemical project.

Iran's central bank is also likely to be targeted by Brussels. While the extent of the measures is still under discussion, Brussels is likely to freeze some of the Iranian central bank's assets and to ban some transactions with it.

The U.S. passed legislation at the end of 2011 threatening sanctions against financial firms that dealt with Iran's central bank.

-By Laurence Norman, Dow Jones Newswires; 32-0-2-741-1481; laurence.norman@dowjones.com

--Stelios Bouras and Benoit Faucon contributed to this article.

(END) Dow Jones Newswires

18-01-12 1850GMT