Shell signs £5bn Iranian gas deal
- Shell defies American pressure and signs £5bn Iranian gas deal
Tuesday January 30, 2007
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
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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