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Shell signs £5bn Iranian gas deal

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    Shell defies American pressure and signs £5bn Iranian gas deal Terry Macalister Tuesday January 30, 2007 The Guardian
    Message 1 of 1 , Feb 2, 2007
      Shell defies American pressure and signs £5bn Iranian gas deal
      Terry Macalister
      Tuesday January 30, 2007
      The Guardian

      Shell has signed an important deal to help Iran develop a major gas
      field, ignorming growing pressure from George Bush to isolate the
      country for being part of what he alleges is an "axis of evil".
      The Anglo-Dutch group, which is struggling to bring more momentum to
      its business after being forced to hand over vital Russian reserves at
      Sakhalin island to the Kremlin, confirmed it had finally reached
      agreement on various aspects of its "Persian LNG" - liquefied natural
      gas - project centred on the South Pars gas field.

      Shell insisted last night it was still a year away from a final
      decision on whether to proceed with the multi-billion-dollar project
      to build a liquefied natural gas terminal capable of handling 8m
      tonnes a year. "We have signed an upstream service agreement as part
      of our work to assess the feasibility of the project," a spokeswoman
      said, referring to the production deal. "Implementation of the
      upstream service agreement is subject to taking a final decision to
      proceed with the midstream LNG project."

      The move is a bold one by Shell because its arch-rival BP has declared
      itself unwilling to invest in Iran at a time when the international
      political climate surrounding the country is so forbidding.

      The United Nations has imposed limited sanctions on Iran to stop it
      enriching uranium and Washington is pushing for harsher sanctions
      against a programme it believes is aimed at building an atom bomb - an
      accusation Tehran rejects.

      Washington has increased pressure on non-US companies in the past year
      not to invest in Iran and some analysts believe it could be hard for
      oil companies to maintain operations in both Iran and the United
      States, where Shell and its Spanish partner Repsol both have fields.

      Fadel Gheit, oil analyst with the Oppenheimer & Co brokerage in New
      York, said Shell was right to proceed in Iran. "This is very positive
      for the company because those that get in at an early stage will be
      rewarded. They are clearly willing to ignore Bush because he is coming
      to the end of his presidency and when he goes everything could change."

      On Sunday, Gholamhossein Nozari, head of the state-owned National
      Iranian Oil Company, told Iran's student news agency ISNA that Iran
      had signed an initial deal worth $10bn (£5bn) with Repsol and Shell to
      produce liquefied natural gas from the South Pars field.

      The Shell spokeswoman said the upstream side of the project would be
      developed under a buyback agreement. Shell and Repsol would build the
      production facilities, which would be owned and operated by an Iranian
      company. Shell and Repsol would be paid back their costs plus a
      pre-agreed profit.

      Separately yesterday, Shell agreed to sell its Los Angeles refinery to
      Texan oil firm Tesoro in a deal worth nearly $2bn.



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