Shell eyes Iran to pay debt when sanc­tions end

The Pak Banker - - BUSINESS -

Royal Dutch Shell will re­pay a $2 bil­lion (Dh7.34 bil­lion) debt to the Na­tional Ira­nian Oil Com­pany (NIOC) when sanc­tions on Iran are lifted and will con­sider in­vest­ing in the coun­try's vast energy sec­tor, Shell's boss for new busi­ness said.

Much would de­pend on the terms of­fered by the Is­lamic Re­pub­lic once sanc­tions were lifted, said Ed­ward Daniels, Shell's ex­ec­u­tive vice-pres­i­dent for com­mer­cial and new busi­ness de­vel­op­ment. He was speak­ing to Reuters while on a Bri­tish gov­ern- ment visit to re­open the coun­try's em­bassy in Tehran. "We are very pleased to have been part of this his­toric del­e­ga­tion. Clearly Iran re­mains un­der sanc­tions with time be­fore sanc­tions will be un­wound and clearly we will be ab­so­lutely ad­her­ing to all sanc­tions," Daniels said.

"Hav­ing said that, when sanc­tions are re­moved we will look to ex­am­ine pos­si­ble op­tions to work in Iran." As part of the UK del­e­ga­tion, Shell met Ira­nian Oil Min­is­ter Bi­jan Nam­dar Zan­geneh and Cen­tral Bank Gover­nor Vali­ol­lah Seif in Tehran. "Iran is and will be an im­por­tant po­ten­tial busi­ness area but of course it will have to rank with other projects that we have across the world - so yes it is a very large player in oil and gas re­serves but projects need to make eco­nomic sense for our com­pany," Daniels said.

Iran has 9.3 per cent of the world's proven oil re­serves, the fourth largest af­ter Venezuela, Saudi Ara­bia and Canada, and 18.2 per cent of the world's nat­u­ral gas re­serves, big­ger even that Rus­sia's 17.4 per cent share, ac­cord­ing to the BP Sta­tis­ti­cal Re­view of World Energy. Daniels would not be drawn on when more Ira­nian crude oil could come back on to the mar­ket.

"I am not go­ing to spec­u­late on that I'm afraid. That is very much bound up with when and how sanc­tions are un­wound and that is a lit­tle bit in the lap of oth­ers," he said. Shell has around $2 bil­lion in out­stand­ing debt to the Is­lamic Re­pub­lic as a re­sult of Ira­nian oil de­liv­er­ies which Shell had been un­able to pay for due to sanc­tions. "We would like to make that pay­ment as soon as pos­si­ble. As yet, we can­not do so," Daniels said.

Western sanc­tions have cut Iran's oil ex­ports by more than half to around 1.1 mil­lion bar­rels per day from a pre-2012 level of 2.5 mil­lion bpd, with the loss of oil in­come mak­ing it dif­fi­cult to in­vest in new de­vel­op­ment and pay for the equip­ment and ser­vices needed to keep its pro­duc­tion op­er­at­ing smoothly.

So when does Iran's energy sec­tor come back into fash­ion af­ter years in the cold? "We need to un­der­stand the pri­or­i­ties on the Ira­nian side, the terms and con­di­tions and then rank those pos­si­bil­i­ties in our global port­fo­lio but I am not re­ally clear on all of them," Daniels said.

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