Deutsche Bank Handling Oil Transactions Again

A deputy oil minister said on Saturday that oil cooperation between Iran and Germany’s Deutsche Bank has resumed.

According to Amirhossein Zamaninia, negotiations are being held also with other major European banks and their collaboration with Iran is expected to gain momentum in the next few weeks, IRNA reported.

Noting the large banks' reluctance to cooperate with Iran in post-sanctions era to handle oil transactions, the official said unlike in the past when collaboration was limited to small European banks, large banks are also showing interest in boosting relations with Iran as it opens up its economy to the outside world.

"Financial transactions with Deutsche Bank started a few days ago over a number of oil deals," he said, noting that plans are in place to develop banking ties with several high-profile European financial institutions.

Pointing to talks with oil giants regarding the new oil partnership under IPC (Iran Petroleum Contracts), Zamaninia said, “A number of enterprises are still skeptical about resuming  cooperation with Iran within the framework of the new model. However, negotiations and contacts are underway" to resolve the problems and move forward.

"Negotiations have been held to introduce IPC to international companies,” the official noted, saying that agreements have been reached with several European companies the results of which will be made public in the near future.

Deutsche Bank officially suspended banking transactions in Iran in 2007, namely those related to oil or oil byproducts. In the same year, Deutsche Bank spokesman Ronald Weichert announced that it was pulling out of Iran to comply with international sanctions imposed on Tehran over the nuclear energy program dispute.

Despite the removal of some banking restrictions in January, Tehran has secured ties with only a limited number of banks as US sanctions related to non-nuclear issues still remain in force.

Iran is in active talks with insurers to provide cover in a market worth $9 billion last year and potentially double that in the next decade.

--- Insuring Tankers

According to Zamaninia, European insurers now have no problems insuring Iranian oil tankers.

Protection and Indemnity (P&I) clubs—marine insurers owned by shipping firms—have started to provide cover for Iran’s shipping fleet, including its oil tankers.

Jonathan Andrews, director and head of eastern underwriting with Britain’s Steamship Mutual, told Reuters, "We have a long history of insuring Iranian ship owners, and we are happy to be insuring our former members again."

Ship insurers say there are still constraints on payments, given a freeze on using the US financial system. European banks face problems since transactions with Iran in dollars cannot be processed through the US financial system.

“Problems remain in relation to the channeling of payments through the banking systems,” noted Andrew Bardot, executive officer with the International Group of P&I Clubs, adding that solutions are being found, but it is a difficult process and likely to remain so for the foreseeable future.

As Iran has aimed to ramp up oil exports, securing marine insurance has been crucial. Top tier western ship insurers are slowly reaching deals with Iran as they seek to reenter a multibillion-dollar market.