Japan this week became the first of Iran's oil buyers to make a payment for crude imports under an interim nuclear deal, sources told Reuters on Wednesday, as the West eased sanctions against the Iranian economy.
Tough international sanctions over the past two years have cut Iran's oil exports in half. U.S. measures imposed a year ago stopped the remaining importers of Iranian oil from transferring cash to Tehran.
Tokyo's role in sending the first funds may be a boon for Japanese firms jostling for position with international rivals to invest in Iran's oil and gas sector.
It is unclear why Japan was the first of Iran's oil buyers to pay. China, India and South Korea also buy crude from Iran and all have billions of dollars of cash held in Iranian accounts pending transfer.
The Iranian funds were released earlier this week from an account held by the Bank of Japan, three sources told Reuters speaking on condition of anonymity because of the sensitivity of the issue. One of the sources confirmed the amount was for $550 million, while another said it was likely further releases of Iranian funds would be made by Japan as they come due.
A substantial portion of frozen Iranian funds are held at the Bank of Japan, one of the sources said.
The funds were transferred to an Iranian Central Bank account in Switzerland, a U.S. Treasury spokeswoman said earlier this week.
Under a November 24 agreement with six major powers, Tehran gets limited sanctions relief in exchange for steps to curb its nuclear program.
The interim agreement gives Iran access to $4.2 billion of its oil revenues frozen abroad if it carries out its part of the deal, while parties continue negotiations for a final agreement within a year. The next round of talks starts on February 18.
Some payments under the six-month deal, which officially began on January 20, depend on Iran fulfilling its commitment to dilute half of its 20 percent enriched uranium to no more than 5 percent enriched uranium.
Until the interim deal, Iran's importers had been steadily reducing purchases to avoid falling foul of U.S. and European Union sanctions.
The four Asian buyers together cut oil imports from Iran by 15 percent on the year to an average of 935,862 barrels per day (bpd) in 2013, government and industry data showed.
Iranian President Hassan Rouhani said last month that Iran was seeking a comprehensive agreement so it can develop its economy, inviting Western companies to seize opportunities now and promising oil executives a new, attractive investment model for oil contracts by September.
Oil and other companies from France and Russia have already responded.
Iran welcomed a senior French trade delegation to the country on Monday, telling more than 100 executives that the far-sighted among them stood to win the race for business following an easing of some economic sanctions.
A source close to the delegation told Reuters it was the most senior group of executives and financiers to visit Iran since the 1979 revolution.
Iran cannot get its next installment of $450 million on March 1 unless the International Atomic Energy Agency confirms Tehran has done half the necessary dilution of its enriched uranium, according to a Treasury fact sheet.
The following is a table outlining the payments totaling $4.2 billion and their conditions to Iran following the November agreement between Tehran and the five powers.
Feb 1 $550 million paid, transferred from Bank of Japan
Mar 1 $450 million contingent on confirmation of dilution of half of Iran's stockpile of near-20% enriched uranium it is required to dilute
Mar 7 $550 million
Apr 10 $550 million
Apr 15 $450 million contingent on confirmation dilution of the rest of Iran's stockpile of near-20% enriched uranium it is required to dilute
May 14 $550 million
Jun 17 $550 million
Jul 20 $550 million contingent on confirmation Iran has fulfilled all of its commitments