Iran, Shell start oil negotiations

Oil&Gas Materials 27 October 2013 13:33 (UTC +04:00)

Azerbaijan, Baku, Oct.27/ Trend R.Zamanov/

Iran's oil ministry and the Royal Dutch Shell have started a new round of talks for settling the multinational company's debts to Iran.

Shell's debts to Iran amounts to $2.3 billion, the Mehr News Agency reported.

Iran's oil ministry has formed a special workgroup to follow the talks.

Former Oil Minister Rostam Qasemi said in April that under recent permissions issued by the EU and the UN, the oil company will settle its debt to Iran.

Shell lost money trading Iranian crude in 2012 shortly before a European Union embargo and still owes $2.3 billion to Tehran for oil purchases, Reuters reported.

The firm said its trading division generated gross revenue of $481 million in 2012 on Iranian oil purchases and a net loss of $6 million. Condensate and fuel oil purchases from Iran generated gross revenue of $631 million and a net profit of $4 million, failing to compensate for the loss in crude.

"None of these purchases has been paid for, and all contracts were terminated and activities ceased before June 28, 2012," Shell said referring to the date when sanctions on Iranian oil came into force.

"Currently, we have approximately $2,336 million payable to, and $11 million receivable from, National Iranian Oil Company. We are unable to settle the payable position as a result of applicable sanctions," Shell said.

Shell suspended all trade with Iran before last June but failed to settle its accounts with the National Iranian Oil Company (NIOC) ahead of the embargo, which was imposed as part of the West's standoff with Iran over Tehran's nuclear program.

Shell ceased upstream activities and suspended new business developments in Iran back in 2010 and is closing its representative office in Iran, it said.