Shell, BP Want Return

Shell, BP Want Return
Shell, BP Want Return

British oil and gas firms BP and Royal Dutch Shell want to resume business with Iran, a senior Iranian official said, amid reports of some of the worst financial performances of the two majors in years.

"Shell and BP are looking for investment opportunities and partnership in Iran's oil and gas projects," Amirhossein Zamani-Nia, deputy for international affairs at the Oil Ministry, was quoted as saying by Shana on Monday.

He made the statement on the sidelines of a meeting in Tehran with Lord Lamont, the British trade envoy to Iran, who is on a mission to boost the UK's underwhelming record of export.

"Lamont, who chairs the British-Iranian Chamber of Commerce, also pledged that the UK Export Finance is ready to provide insurance for British enterprises keen on operating in Iran's market," Zamani-Nia said.

He added that the two sides discussed ways of settling Iran's accumulated oil dues from Rhum gas field in the North Sea. 

The field is shared equally by BP and the Iranian Oil Company, a subsidiary of the state-owned National Iranian Oil Company, but Iran was forced out of the lucrative venture in 2010 due to sanctions.

As part of efforts to put British companies back on Iran's business map, Lamont discussed Tehran-London's banking hurdles in a meeting with officials of the Central Bank of Iran.

As a stepping stone to rekindle ties with the Middle East country, Royal Dutch Shell cleared its outstanding €1.77 billion ($1.9 billion) debt to Iran for the crude oil it had bought but was unable to pay due to financial restrictions.

A Shell spokesperson said in a statement last month the company is “interested in exploring the role Shell can play in developing Iran’s energy potential within the boundaries of applicable laws”.

   Financial Woes

Shell and BP have taken a hammering from falling oil prices. To adapt with the new order in the oil industry, the British heavyweights have been forced to announce massive layoffs and scrap drilling and production projects worth billions of dollars.

BP said on Tuesday it could cut capital spending further after reporting an 80% drop in profits in the first quarter of the year, when oil prices touched a near 13-year low.

The British oil company, the first major to report on one of the weakest quarters, lowered its 2016 spending target to $17 billion, from $17-19 billion, and said the marker could fall to $15-$17 billion next year if oil prices remain weak.

It reported a 91% decline in fourth-quarter earnings after average crude oil prices dropped to the lowest in more than a decade. The company reported a net loss of $6.5 billion for 2015, the most in at least 30 years.

Royal Dutch Shell is closing three UK offices, affecting 1,600 employees. It has also begun a voluntary redundancy program as part of a plan to cut 10,300 jobs as it attempts to cope with the recent plunge in oil prices, and another 2,800 following its merger with BG.