Royal Dutch Shell will repay a $2 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 has said.
Much would depend on the terms offered by Iran once sanctions were lifted, said Edward Daniels, Shell’s executive vice-president for commercial and new business development. He was on a British government visit to reopen the country’s embassy.
“We are very pleased to have been part of this historic delegation. Clearly Iran remains under sanctions until these are unwound, and clearly we will be absolutely adhering to all sanctions,” Daniels said.
“Having said that, when sanctions are removed we will 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.
Much will depend on the terms offered by Iran
“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 than Russia’s 17.4 per cent share.
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,” 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.
“It was a high-level conversation with the energy minister which talked about wishing to see foreign investment in the sector, but really didn’t go into much more detail than that,” Daniels said.