Shell, BP, Statoil not engaged in commercial talks with Iran

Oil&Gas Materials 5 June 2015 08:00 (UTC +04:00)
Despite interests in European giant oil and gas companies returning to Iran, they haven't started commercial talks due to sanctions.
Shell, BP, Statoil not engaged in commercial talks with Iran

Baku, Azerbaijan, June 4

By Dalga Khatinoglu - Trend:

Despite interests in European giant oil and gas companies returning to Iran, they haven't started commercial talks due to sanctions.

Royal Dutch Shell Plc, BP Plc, Total SA, Eni SpA and other companies have lauded their interest in a return to Iran, but "fully abiding the EU sanctions imposed on Iran" is their major concern.

Knut Rostad, A spokesman of Statoil told Trend June 4 that "we do not have any activities in Iran today. We closed our office in Tehran in 2013 and we will continue to abide by all relevant sanctions that are still in place. Iran is a country with significant resource potential. We are monitoring the developments, but I do not want to speculate in the outcome of the negotiations".

Statoil was involved in giant projects in Iran, such as developing the phases 6 to 8 of the giant South Pars gas field. The production capacity of these phases is about 75 million cubic meters per day.

Iran had $600 million in debt to Statoil when EU imposed sanctions on Iran in mid-2012. Recently Iran said it had paid off the debt by handing over liquefied petroleum gas or condensate cargoes since then.

Iran and P5+1 are negotiating around the country's nuclear program to reach a comprehensive deal by June 30, which will pave the way for lifting sanctions on Iran.

One of giant companies involved in both Iran's energy projects and crude oil purchase is Shell. This company has a 60-year experience in developing Iranian oil and gas projects.

The official website of Shell announced June 3 that it was discussing the repayment of an outstanding debt of over $2 billion with Iran when international sanctions are lifted.

The debt was due to purchasing Iranian crude oil before mid-2012.

Iran puts the exact amount of debt at $2.3 billion.

Nureddin Wefati, the head of Media Relations for Middle East & North Africa of Shell told Trend June 4 that "we can confirm our outstanding obligation to National Iranian Oil Company that emerged as a result of the international sanctions regime. We are unable to settle the payable position as a result of applicable sanctions that require authorization to make the payment. We are engaging with all relevant stakeholders regarding the issue. We are working on the speedy payment in a compliant and transparent manner".

Answering a question about returning to Iranian projects, Wefati said that "We review our growth portfolio on a regular basis and do not exclude any countries that are open to foreign investment. Iran has significant oil and gas resources. Should future sanctions relief make that possible, we would be interested in exploring with the government of Iran what role Shell can play in developing its energy potential. One important factor determining our interest - besides sanctions relief - will be what the new fiscal regime for the energy sector will look like".

Iran with 33.8 trillion cubic meters of proved gas reserves as well as 157 billion barrels of crude oil reserves stands at first and forth place in the world respectively.

Coming to negotiations with Iran, Wefati said, "as per the sanctions we are not in a position to engage in commercial discussions relating to future projects or investments".

BP Plc is another giant company that is interested in returning to Iran.

BP CEO Bob Dudley said June 3 that this company would be "very much" interested in investing in Iran when sanctions are removed.

Toby Odone, Deputy Head at BP Press Office told Trend June 4 that "all I can say is we are in compliance with the EU and US sanctions and currently have no plans to invest in Iran".

In response to Trend's request, Eni's spokeswoman Spina Domenico referred to CEO of Eni Claudio Descalzi's interview to Bloomberg June 3 as saying that beside lifting sanctions, Iran should change oil contracts and make them more attractive.

Eni SpA, the Italian group that invested in Iran in the early 2000s, has declared its interest in returning to the Middle Eastern country if the nuclear sanctions are lifted.

"I think by year-end Tehran could propose a new type of contract, more similar to international standards and less penalizing for operators," Descalzi told Italian newspaper La Repubblica in May.

Iran used to offer buy-back contracts to foreign companies, but it is preparing to present a new kind of contracts enabling foreign companies to establish joint ventures with Iranian companies to develop projects.

Total wasn't immediately available for comment about its plans in Iran, but it has declared before that it is waiting for bans lifting on Tehran.

Edited by CN

Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service

Follow him on @dalgakhatinoglu