There’s a story in the Wall Street Journal today that China’s state-run energy company Sinopec is offering $3 billion to further develop an Iranian oil field, claiming that it’s an add-on to an existing development deal and therefore doesn’t run afoul of secondary sanctions on new oil field development deals.
It will be fascinating to see Washington’s reaction, since it seems, on its face, that the deal is counter to the spirit, if not the letter, of the regulation. Given the size of the economic benefit it would give to Iran, it’s hard to see the U.S. not trying to quash the deal. Conversely, given the trade tensions with Beijing, it’s similarly challenging to see the imposition of secondary sanctions on Sinopec.
Interesting thought #1: Sinopec could create a subsidiary which just manages this development. OFAC could then just sanction the subsidiary, leaving the bulk of Sinopec untouched. Perhaps this is the best of both worlds – Washington can claim to be tough on Iran, while not raising China’s ire.
Disclaimer: The Wall Street Journal is part of Dow Jones, for whom Mr. Watchlist works.