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Daily Telegraph: Shell deal in Iran faces US sanctions

By Russell Hotten
Last Updated: 12:44am GMT 30/01/2007

A proposed agreement between Royal Dutch Shell and Spain’s Repsol to help commercialise Iranian gas fields could trigger US sanctions, a senior Washington official warned last night.

On Sunday Iran signed a preliminary agreement with the two companies to produce liquefied natural gas from its South Pars field in a deal worth some $10bn (£5bn).

The United Nations, backed strongly by America, has imposed limited sanctions on Iran to stop it developing a nuclear programme.

Yesterday State Department spokesman Sean McCormack said the investment agreement, if confirmed, would likely trigger a US investigation and possible sanctions under US law.

The 1996 Iran-Libya Sanctions Act requires the US president to impose sanctions on companies that invest more than $20m in Iran’s energy sector. “The people who deal with those laws on a daily basis in their application I’m sure will take a look at this particular deal,” Mr McCormack said.

He declined to speculate on what possible sanctions Repsol and Shell, which has operations in the US, could face if they go through with the South Pars investment.

Meanwhile, Shell announced yesterday that it was to sell a refining plant and 250 petrol-filling stations in California for $1.63bn (£830m), in what it described as a re-balancing of its portfolio. The operations are being bought by Tesoro, the second-largest refiner in the western US. The filling stations will continue to operate under the Shell brand.

Last week Shell’s chief executive, Jeroen van der Veer, said that he wanted to achieve a better balance between the number of filling stations and the amount of refining capacity Shell has in any region.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/30/cnshell30.xml

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