Legal tips Doing business in Iran
The opening of the Iranian market presents an inviting and potentially lucrative opportunity for companies in the oil & gas sector. Potential investors should prepare and equip themselves for the challenges ahead. Set out below are some key considerations for entering this complex market: Beware of residual sanctions and plan accordingly – – Some sanctions remain in place. Certain Iranian entities remain EU and US designated, so enhanced due diligence on counterparties is required – – US persons (individuals or entities) are still excluded Assess corporate law issues – – Assess whether existing licences for operating in Iran are still valid. Are there are any outstanding tax or other financial liabilities from previous business activities to account for before renewing licences? – – If planning to expand, review whether your existing
business structure allows you to engage in new operations (eg under Iranian law, representative
from dealings with Iran – reconfigure internal structures/board decision-making if necessary
offices cannot participate in profit-making activities or receive Iran-sourced income). Take steps to obtain the necessary licences Act fast on IP – – Register your IP rights at the outset. If already registered, investigate whether any infringement has occurred in the interim and assess what enforcement action is required
– – Confirm that banking arrangements are available, as US banks are prohibited from clearing US dollar payments and non-US banks may refuse payments linked to Iranian trade – – Review insurance policies and financial covenants in loan documents to check for prohibitions – – Include provisions in contracts to deal with any future snap-back of sanctions Manage relationships appropriately – – Consider whether pre-sanctions relationships are still valid. Fresh due diligence may be necessary before resuming them – – If using a franchise or agency model with a new business partner, consider the consequences of terminating existing arrangements – – Resolve any dormant or pending disputes caused by terminating or suspending relationships when sanctions were introduced – or it could affect ability to obtain necessary approvals and permits
With 157,530 million barrels of crude oil reserves and natural gas reserves of 34,020 billion cubic/meters, it is estimated that the Iranian oil & gas industry will require USD 200 billion in investment over the next five years.
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