Royal Dutch Shell was to sign initial agreements yesterday to develop Iranian oil and gas fields, an Iranian official said, the first deal by the world’s second biggest listed oil firm in Iran since sanctions were lifted.
Analysts said the deals showed major oil companies were prepared to keep doing business with Iran despite the risk that US President-elect Donald Trump could scrap the nuclear deal that ended the sanctions earlier this year.
Shell would sign three memoranda of understanding (MoUs) agreements in Tehran to develop the South Azadegan, Yadavaran oil fields and the Kish gas field, the Iranian Oil Ministry official said.
The South Azadegan and Yadavaran fields both straddle Iran’s border with Iraq.
These preliminary agreements could mark a strong sign of confidence towards the sustainability of the nuclear deal
Total, which last month signed the first deal by a Western energy firm since sanctions were lifted, will start talks about new oil and gas projects but was not due to sign any deals yesterday, the official said. Shell and Total declined to comment.
“These preliminary agreements could mark a strong sign of confidence towards the sustainability of the nuclear deal,” said Homayoun Falakshahi, Middle East research analyst at Wood Mackenzie.
“These preliminary agreements come at the right time for President (Hassan) Rouhani, who can leverage on the nuclear deal bearing fruits for Iran’s economy despite Trump’s election,” Falakshahi said.
Trump said during his campaign for the White House that he would scrap Iran’s nuclear pact with world powers, describing it as “the worst deal ever negotiated”.
Iran, the third largest producer in the Organization of the Petroleum Exporting Countries, hopes its new Iran Petroleum Contracts will attract foreign companies and boost production after years of underinvestment. Foreign firms keen to tap Iran’s vast oil and gas reserves have so far made little inroads into the country despite the lifting of many sanctions and the new contracts that aim to improve the terms Iran offers for oil development deals.
Iran will launch its first new-style tender to develop oil and gas fields since the lifting of sanctions after January next year.