Royal Dutch Shell Plc  .com Rotating Header Image

Financial Times: Interest in Iranian gas field escalates

By Ed Crooksand Stephen Fidler
Published: January 24 2007 02:00 | Last updated: January 24 2007 02:00

Royal Dutch Shell is expected to sign an agreement on Saturday bringing it closer to a large investment in Iran, in spite of the threat of further pressure on the country over its nuclear programme.

A document seen by Expansión, the FT’s Spanish sister publication, suggests the agreement will be signed between Shell, Repsol of Spain and the Iranian government for a service contract on phases 13 and 14 of the South Pars gas field.

A final decision on the project, valued at $4.3bn (£2.2bn), is expected in the first quarter of next year. Production could begin in 2011. It would involve building a new liquefied natural gas plant able to produce 16.2m tonnes of LNG a year, costing $2.5bn, and a port terminal and other infrastructure, costing $1.8bn.

Iran holds the world’s second-largest gas resources after Russia. The South Pars field is estimated to hold a 10th of the world’s total gas reserves and phases 13 and 14 alone hold 27,700bn cu ft: enough to meet the world’s demand for more than three months.

Shell and Repsol would each own 25 per cent of the project, called Persian LNG, with the National Iranian Oil Company holding the remainder and retaining ownership of the reserves. The document suggested the gas could be sold in Asian countries including China and Japan.

Iran has been interested in attracting foreign investment into its gas and oil industries to boost production. However, doing business there is overshadowed by the threat of further economic sanctions. International companies also report deep difficulties in dealing with bureaucracy.

Shell’s interest in Iran is testimony to the challenges it and other international oil companies face in finding new sources of oil and gas.

US legislation introduced in 1996 and renewed last year imposes sanctions on non-US companies investing in Iran’s oil industry.

But sanctions have not been imposed against European Union companies since 1998 because successive US administrations have waived them on national security grounds. However, the US is tightening sanctions on Iranian institutions for their alleged involvement in terrorism and financing Iran’s nuclear and missile programmes and is encouraging European governments to do the same.

“Given Iran’s flouting of UN resolutions over the development of its nuclear programme and US concerns about Iranian interference in Iraq, it seems to me that the US administration will be much more sensitive about this sort of investment,” said Jeffrey Schott of the Peterson Institute for International Economics in Washington.

Copyright The Financial Times Limited 2007 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Financial Times: Interest in Iranian gas field escalates”

Leave a Comment

%d bloggers like this: