The threat of U.S. sanctions has prompted Russian oil giant Lukoil to put its plans to develop projects in Iran on hold while the Indian company that owns the world's largest oil refining complex plans to stop buying oil from Iran, Reuters reported on May 30.
Both developments showed the difficulty faced by governments like Russia, France, and India which have vowed that they will maintain their business ties with Tehran despite a U.S. decision to withdraw from Iran's nuclear deal with world powers and reimpose sanctions.
The United States announced earlier this month that was abandoning the 2015 agreement and will by November reinstate tough and far-reaching U.S. sanctions, which were lifted under the deal in exchange for curbs on Iran's nuclear activities.
A Lukoil official told investors during a conference call on May 30 that "considering the latest developments, I guess, it's too early to say what our plans [about Iran] will be. For the moment, basically, we have everything on hold."
Lukoil's cautious stance follows an announcement by French energy giant Total earlier this month that it will abandon a major gas project in Iran unless it gets a U.S. sanctions waiver.
Russia and France, both signatories to the nuclear deal, have vowed to keep upholding it and have been working with Tehran to find ways to help their businesses avoid U.S. sanctions.
But the avenues they are striving to open up for businesses have not been judged safe enough by a growing number of corporations that face the possibility of billion-dollar fines from the United States once the sanctions are reimposed.
France's Total cited its heavy reliance on U.S. markets for debt financing in saying it was likely to exit Iran. And Lukoil has said after previous rounds of U.S. sanctions that the punitive measures were seriously impairing access to global financing by Lukoil and other Russian corporations.
Lukoil, one of the few major Russian energy firms left that is not owned or controlled by the government, was previously forced to pull out of an Iranian oil project in 2011 when the United States and the European Union intensified sanctions on Iran.
India's government was not a signatory to the nuclear deal, but New Delhi announced this week that it will not honor the U.S. sanctions and will continue to import Iranian oil and engage in other business with Iran.
Yet Reuters reported on May 30 that India's Reliance Industries, which owns the world's biggest refining complex in the state of Gujarat, has significant exposure to the U.S. financial system and was wary of the U.S. sanctions.
According to Reuters, which cites anonymous sources, Reliance officials have told the National Iranian Oil Company that the firm will stop oil imports from Tehran in October or November.
Reuters said that some insurance companies have asked Reliance to end its exposure to Iran before the sanctions take effect in November.
With global insurers voicing concern about the risk of continuing to do business with Iran, Maersk and some other global shipping lines have said they will not take new bookings for oil shipments from Iran.
The possible pull-out from Iran by Lukoil, which had proposed developing Iran's vast Mansouri and Abteymour oil fields in Ahvaz, would be a blow to Iran's oil industry, which had revived after the lifting of sanctions under the nuclear deal.
Russian energy firms have been among the most active foreign investors in Iran's oil and gas industry since most Western sanctions were lifted in early 2016.
But Iranian officials have said their biggest fear is the possible loss of major customers for Iran's oil. They have said that, as long as Iran is able to continuing selling its oil around the world, Tehran will honor the nuclear deal.
Iranian crude exports hit a record high of 2.6 million barrels a day in April, before the U.S. withdrawal announcement. But they declined slightly by 100,000 barrels a day in May in a tentative sign that the threat of U.S . sanctions may be deterring buyers, the Petro-Logistics oil-tanker tracking company said on May 30.
Most of Iran's crude exports, at least 1.8 million barrels a day, goes to India, China, and other Asian buyers.
But Iranian Oil Minister Bijan Zanganeh said on May 30 that Tehran was hanging its hopes on European nations making good on their pledges to keep the nuclear deal and Iranian business ties alive.
"Europe is buying only one third of Iranian oil, but an agreement with Europe is important to guarantee our sales and find insurance for the ships ferrying the crude," Zanganehe said on state television. "Other buyers would also be inspired by this," he added.