Shell Faces Dilemma Over Proposed Investment In Iran Gas Field

2007-02-02

Reuters

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Royal Dutch Shell said yesterday it faces a dilemma over its proposed multibillion dollar investment in a gas field in Iran, which is under US pressure for its atomic work and alleged interference in Iraq.

The Anglo-Dutch company and Spain's Repsol have signed a preliminary deal to develop part of Iran's giant South Pars gasfield, despite Washington urging its allies not to invest in the country. Tehran values the deal at $ 10 billion.

Shell Chief Executive Jeroen van der Veer said politics would be taken into account when a final investment decision is taken in about a year.

"I would like to emphasise that we have here quite a dilemma. This is Iran. They are the number two in oil and gas reserves in the world," he told a conference call following Shell's fourth quarter results.

"But we have all the short-term political concerns."

There are strong commercial considerations. Shell and Repsol are both seeking access to big sources of oil and gas reserves after meeting limited success in finding new supplies in recent years.

Iran is one of the few major energy resource holders open to foreign investors. Saudi Arabia, home to the world's biggest oil reserves, keeps its oilfields closed to international firms.

If the United States gets its way, the ambitious project might not materialise.

Source: IMRA – Independent Media Review and Analysis