Royal Dutch Shell will repay a $2 billion debt to the National Iranian Oil Company when sanctions on Iran are lifted and will consider investing in the country's vast energy sector, Shell's boss for new business said.
Much would depend on the terms offered by the Islamic Republic once sanctions were lifted, said Edward Daniels, Shell's executive vice president for commercial and new business development. He was speaking to Reuters while on a British government visit to reopen the country's embassy in Tehran.
"We are very pleased to have been part of this historic delegation. Clearly Iran remains under sanctions with time before sanctions will be unwound and clearly we will be absolutely adhering to all sanctions," Daniels said.
"Having said that, when sanctions are removed, we will look to examine possible options to work in Iran."
As part of the UK delegation, Shell met Iranian Oil Minister Bijan Namdar Zanganeh and Central Bank Governor Valiollah Seif in Tehran.
"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% of the world's proven oil reserves, the fourth largest after Venezuela, Saudi Arabia and Canada, and 18.2% of the world's natural gas reserves, bigger even than Russia's 17.4% share, according to the BP Statistical Review of World Energy.
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 am 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. As yet, we cannot do so," 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.
So when does Iran's energy sector come back into fashion after years in the cold?
"We need to understand the priorities on the Iranian side, the terms and conditions and then rank those possibilities in our global portfolio, but I am not really clear on all of them," Daniels said.
"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."
