The U.S. Department of Treasury Steps in to Patrol Petroleum

Priya Gupta

Associate Editor

Loyola University Chicago School of Law, JD 2024

The US Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned nine entities involved in the production, sale, and shipment of Iranian petrochemicals and petroleum to buyers in Asia, in violation of US sanctions. Six Iran-based petrochemical manufacturers and three firms in Malaysia and Singapore have been targeted for facilitating the sale and shipment of petroleum and petrochemicals on behalf of Triliance Petrochemical Co. Ltd., which OFAC previously designated for facilitating the sale of Iranian petroleum products. The sanctions are aimed at targeting Tehran’s sources of illicit revenue, and all property and interests in property of the targeted entities must be blocked and reported to OFAC.

Who has been sanctioned?

The US Treasury Department has sanctioned nine companies for their roles in manufacturing Iranian petroleum products and selling them to buyers in Asia, which are valued at hundreds of millions of dollars, through Trilliance Petrochemical Co. The sanctions targeted shipments to Asia because of new policies increasing pressure on Iran’s illegal oil trade with China. The OFAC has designated Iran’s Amir Kabir Petrochemical Company (AKPC) and its subsidiary, Simorgh Petrochemical Company, for their support of Triliance Petrochemical Co Ltd, which the US government has blacklisted since 2020. Simorgh Petrochemical Company has now also been added to the List of Specially Designated Nationals and Blocked Persons (SDN List). Triliance has purchased millions of dollars’ worth of low-density polyethylene (LDPE) from AKPC for shipment to China. OFAC has also targeted four subsidiaries of Iran’s Marun Petrochemical Company for their role in supplying petrochemicals to Triliance. These Iran-based companies, all of which are majority or fully owned by Marun Petrochemical, operate within the petrochemical industry and supply millions of dollars’ worth of petrochemicals to Triliance. The sanctions prohibit US citizens from dealing with the designated entities and freeze any assets they may have under US jurisdiction. In addition, since they are all (directly or indirectly) 50 percent or more owned by Marun Petrochemical, they have been added to the SDN List.

How has Trillance been able to supply petrochemicals?

OFAC has sanctioned three companies (Asia Fuel PTE. Ltd., Sense Shipping and Trading SDN., and Unicious Energy PTE. Ltd.) for their involvement in providing financial and material support to Triliance, a company that is already on the SDN List. Since the Trump Administration imposed sanctions in May 2019, China has been the main buyer of petroleum and other illicit oil from Iran. Iran has been turning to buyers in East Asia to sell its petroleum and petrochemicals, violating US sanctions. Asia Fuel, based in Singapore, has facilitated the shipment of petroleum products worth millions of dollars to customers in East Asia and paid storage fees on behalf of Triliance to house petroleum products in a Malaysia-based floating storage vessel. Sense Shipping, a front company for Triliance based in Kuala Lumpur, Malaysia, has facilitated the shipment of tens of thousands of metric tons of petrochemicals to foreign customers. Sense Shipping previously operated under the name Eastchem Shipping SDN. BHD. Unicious Energy, also based in Singapore, has coordinated millions of dollars in petroleum-related payments for other companies within Triliance’s network and aided Triliance in its sale of hundreds of millions of dollars of petroleum products.

OFAC has designated these three companies for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to, or in support of, Triliance. The move is pursuant to E.O. 13846, which allows the US to impose sanctions on companies that support Iran’s petroleum-related transactions and entities owned or controlled by them. The designations are part of the US’s ongoing efforts to counter Iran’s support for terrorism and its nuclear program. The move also highlights the US’s commitment to enforcing its sanctions against Iran and those who support it.

What are the impacts of these sanctions?

These sanctions block any and all property or property interests that these companies have in the United States and make them reportable to the OFAC. In addition, they may not deal with US citizens or make any dealings within the US. In regard to foreign company deals, if foreign individuals or entities decide to conduct business with any individual or entity that has been sanctioned by the US, they themselves may face US sanctions. Sanctions are just one of the ways that the US tries to bring about a positive change in behavior. Although it is an extreme solution to make individuals and entities change their ways, sometimes harsh consequences are the only way to change behavior. The sanctions are targeting Tehran’s sources of illicit revenue and will continue to occur if companies support the trading of petroleum products.