Talks Underway With  Shell to Build LNG Plants

Talks Underway With  Shell to Build LNG PlantsTalks Underway With  Shell to Build LNG Plants

Oil officials discussed grounds for cooperation in the post-sanctions period with oil and gas major Royal Dutch Shell in a meeting in the Netherlands, deputy for international affairs at the Oil Ministry said on Monday.

"A new round of talks is underway with Shell … The Anglo-Dutch company is ready to build new liquefied natural gas plants in Iran," Amirhossein Zamaninia said without elaboration, Mehr News Agency reported.

Shell was active in Iran before the US introduced tough sanctions against the Persian Gulf country to limit its nuclear program.  

The Hague-based company had signed a contract to develop Soroush and Norouz oilfields in the Persian Gulf and also help develop Phase 11 of South Pars, the country's biggest gas field, but it halted operations in Iran for fear of violating the sanctions.

Government officials say Iran will join the so-called LNG Exporters' Club in two years, when the sanctions are lifted and petrochemical production capacity reaches 10.5 million tons a year.

The sanctions, together with a lack of modern technology and budget, have hampered development of fields, allowing neighbors to cash in on the immense joint oil and gas reserves in the Persian Gulf region. According to reports, Qatar is drawing 1.6 times faster from the joint field.

In September, Oil Minister Bijan Namdar Zanganeh discussed LNG supply to Spanish terminals and, from there, to other European destinations. Later that month, LNG exports were discussed with a Polish delegation in the capital Tehran.

In addition, French oil and gas giant Total also expressed interest in buying and marketing Iranian LNG.

Iranian officials also discussed Shell's debt to the Islamic Republic.

The country was cut off from the global financial system and now has billions of assets frozen overseas, mostly blocked oil revenues, due to banking restrictions.


News of Shell's reentry to Iran broke out shortly after the July 14 agreement between Iran and six world powers, based on which Tehran will limit its nuclear program in exchange for sanctions reliefs.

In September, Iranian authorities said plans were underway to commercialize gas stations in Iran, with Shell and Total said to be shown the green light to build a total of 200 new gas stations under their brand names nationwide, but officials were quick to rule out any such agreement.

Low oil prices have taken their toll on Shell, as the company last week reported a loss of $7.4 billion in profit in the third quarter, in contrast to $4.5 billion in profits in the same quarter a year earlier.

Shell-BG Deal

Shell on Tuesday sought to assuage investor concerns over its planned $70 billion takeover of BG Group, as it announced plans for further synergies and cost cuts aimed at making the deal work with oil prices in the mid-$60s a barrel.

The Anglo-Dutch group, which hopes to complete the deal early next year, said it now expected synergies to increase by $1 billion to $3.5 billion that will make Shell a leader in LNG and offshore oil production in Brazil.

Shell, which last week reported a huge loss in third-quarter earnings due to writeoffs in Alaska and Canada, said it would reduce its costs by $11 billion in 2015 as it tackles a prolonged period of lower oil prices, currently trading below $50 per barrel.