EU welcomes Iran breakthrough and eyes energy deal

European Union officials will visit Iran as early as next month to explore possible energy links, the EU's energy commissioner said yesterday, as the EU welcomed the lifting of sanctions against the Islamic republic.

In a joint statement with Iranian foreign minister Javad Zarif, the EU's high representative for foreign affairs, Federica Mogherini, said the historic deal demonstrated that the most difficult issues could be solved by "political will, perseverance, and through multilateral diplomacy".

“As Iran has fulfilled its commitments, today multilateral and national economic and financial sanctions related to Iran’s nuclear programme are lifted,” Ms Mogherini said.

“This is an encouraging and strong message that the international community must keep in mind in our efforts to make the world a safer place.”

The EU has been central to the Iranian nuclear talks since November 2013 when Ms Mogherini's predecessor, Catherine Ashton, helped broker a deal with Iran. Since then, the EU has held a seat at the negotiating table in Vienna, along with France, Britain, Germany, Russia, China and the US.

Oil and gas

Under the deal, confirmed by UN officials on Saturday evening, the prohibition on financial transactions to and from Iran will be lifted, including the transfer of funds between individuals and financial institutions. Trade in oil and gas between the EU and Iran will recommence, and sanctions relating to shipbuilding, aviation and insurance will be lifted.

About 300 Iranian individuals and companies have been taken off the sanctions list, though those on the terrorism-related sanctions list will still be outlawed.

Late last week the EU extended its suspension of sanctions against Iran by two weeks to allow time for the implementation of the agreement, which was signed on July 14th.

Speaking ahead of a meeting of EU foreign ministers in Brussels today, Minister for Foreign Affairs Charlie Flanagan welcomed the confirmation of the agreement.

Landmark

“This is a critical landmark in the implementation of that agreement and EU sanctions will now be lifted,” he said.

“This agreement represents an important co-operative effort to deal with one source of tension in a region that already suffers from instability and conflict.”

The suggestion by EU climate and energy commissioner Miguel Arias Cañete that EU officials would travel to Iran next month to explore possible energy links is indicative of trade opportunities dthe thawing of relations may bring.

In particular, the EU is eager to lessen its dependence on Russian energy – especially gas, which accounts for 30 per cent of gas supply into the EU.

The EU is considering the possibility of sourcing more energy from Iran via the so-called southern gas corridor through southern Europe. Mr Cañete said yesterday that trade in oil, gas and nuclear energy might be considered, as well as liquefied natural gas (LNG).

The EU has been forbidden to buy crude oil from Iran since 2012. Prior to sanctions, Iran, which holds the world’s fourth-largest proven oil reserves, supplied most of the huge European oil refineries.

According to Iran’s central bank, the lifting of sanctions will free up €30 billion (€27.5 billion) of foreign reserves, though the US estimates this figure to be higher.