Shell Signs Initial Oil, Gas Deals With Iran

Royal Dutch Shell on Wednesday signed three memoranda of understanding to develop Iranian oil and gas fields, the first deal by the world's second-biggest listed oil firm in Iran since sanctions were lifted in January.

The deal was signed in Tehran by Noureddin Shahnazizadeh, the chief executive of Iran's Petroleum Engineering and Development Company (PEDEC) and Hans Nijkamp, the head of the department for Iran affairs at Royal Dutch Shell, IRNA reported.

The agreement allows Shell to develop the South Azadegan and Yadavaran oilfields and the Kish gas field. South Azadegan and Yadavaran fields both straddle Iran's border with Iraq.

French oil and gas major Total S.A., 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 will not be signing any deals on Wednesday, an Oil Ministry official said.

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, Reuters reported.

"These preliminary agreements could mark a strong sign of confidence towards the sustainability of the nuclear deal," Homayoun Falakshahi, Middle East research analyst at Wood Mackenzie, was reported as saying by Reuters.

"These preliminary agreements come at the right time for President (Hassan) Rouhani, who can leverage on the nuclear deal bearing fruit 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.

Iran, the third largest producer in the Organization of Petroleum Exporting Countries, hopes its new Iran Petroleum Contract 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.