Shell Owes Iran $2.3 Billion

Can’t Be Settled Because of Sanctions

The estimated $2.3 billion payable to the National Iranian Oil Co. can't be settled because of sanctions imposed on Iran, Royal Dutch Shell said in its annual financial filing for 2012 that was published today. (UPI, 21 March)

Shell said it ended upstream commercial operations and new business developments in Iran in 2010 as a result of sanctions.

“We recently began the process to close our small representative office in Iran and terminate all its activities,” Shell's financial filing stated.

“Currently, we have approximately $2.3 billion payable to, and $11 million receivable from, National Iranian Oil Company,” the statement read. “We are unable to settle the payable position as a result of applicable sanctions.”

Iran to Cancel China Gas Contract

Iran has warned China it could cancel a much-delayed $5-billion offshore gas exploration contract to develop South Pars field in the Persian Gulf, Iran’s oil ministry announced on Monday.

“There is a possibility of cancelling the contract signed in 2009 to develop the South Pars gas field -- which holds around eight percent of the world's gas reserves,” said oil ministry spokesman Alireza Nikzad. (Mehr News Agency, 24 December)

  

South Pars, a huge offshore natural gas field shared between Iran and Qatar, holds one of the world’s largest reserves of natural gas. China National Petroleum Corporation (CNPC), China’s largest oil and gas producer and supplier, was contracted for the project.

Iran has accused China in the past of failing to fulfill its commitments and delaying its contractual obligations. It suspended a $16-billion contract with China last year for the North Pars gas field.

“The Chinese side has stated it is not inclined to be part of the project's (South Pars) development,” citing the “high risk” involved in offshore exploration, Nikzad added.

Major Western companies that had been operating in South Pars, among them France's Total and Anglo-Dutch Shell, withdrew from Iran between 2007 and 2010 after international sanctions were imposed over Iran’s controversial nuclear program.

File photo: Land-based facilities at Assaluyeh, Iran, closest land pint to South Pars gas field. (IRNA) 

Iran to Cut Shell for Non-Payment

Iran’s Mehr News Agency reported today that Iran may cut crude shipment to Anglo-Dutch giant Shell because the oil company has been unable to pay for oil purchases of more than 8 million barrels. The move comes after Iran stopped oil sales to top Greek refiners this week also for their inability to pay for their crude purchases. The tightening financial sanctions against Iran make it difficult to process payments through global banking system.

Shell Unable to Pay for Iranian Oil

Reuters reported today that Royal Dutch Shell is struggling to pay off $1 billion that it owes Iran for crude oil because EU and US sanctions now make it impossible to process payments.

“Shell is working hard to figure out a way to pay NIOC (National Iranian Oil Company). It is very sensitive and very difficult. They want to stay in good terms with Iran while abiding sanctions,” said an informed source to Reuters.

With daily contract volumes of 100,000 barrels, Shell was Iran’s second biggest corporate client behind Turkey’s Tupras. The EU has given European companies like Shell until July 1 to wind down their existing businesses with Iran.

Source: Reuters, 26 March 2012