Royal Dutch Shell Plc  .com Rotating Header Image

The Australian: US may punish Shell for Iran deal

Ed Crooks, London
January 31, 2007

THE US authorities would “take a look at” a controversial agreement signed by Royal Dutch Shell which could ultimately lead to a multi-billion-dollar investment in Iran, a US State Department official said.

Shell and its partner, Repsol of Spain, have signed a service agreement with the Iranian Government to continue work on developing blocks 13 and 14 of the giant South Pars gas field, despite mounting international pressure over the country’s nuclear program.

US legislation permits President George W. Bush to take action against non-US companies investing in Iran’s energy sector.

However, because of concerns over an extra-territorial trade dispute and the risk of further alienating allies, no foreign companies have been penalised to date under the Iran Libya Sanctions Act and the subsequent Iran Freedom Support Act.

The US, however, is tightening sanctions on Iranian institutions and encouraging European governments to do the same.

State Department spokesman Sean McCormack said that US government lawyers and policy makers would take a look at the Shell deal, to see whether to take any action.

“If there’s an investment greater than a certain amount, as specified in US law, then our lawyers take a look at it and the policy makers take a look at it, and see if there’s any further steps that we, as a government, take,” he said.

Mr McCormack refused to speculate on what sanctions Repsol and Shell would face if they went through with the South Pars investment. If the project went ahead, it would involve a plant to produce liquefied natural gas to be sold in Europe and Asia.

A final decision on whether to proceed is expected in the first quarter of next year.

The agreement does not put a figure on the value of the project. Shell and its partners are still working on cost estimates. But it was suggested in Iran at the weekend that it could be worth $US10 billion ($13 billion).

Shell and Repsol would each have 25 per cent of the project, with the National Iranian Oil Co holding 50 per cent.

Iran holds the world’s second largest gas reserves, after Russia. Phases 13 and 14 of South Pars are estimated to hold 27,700 billion cubic feet – enough to meet the world’s demand for more than three months.

Shell also announced the sale of one of its US refineries and 250 petrol stations for $US1.63 billion, bringing to almost $US10 billion the amount it has raised from selling downstream assets in the past four years.

It has sold the refinery, south of Los Angeles, and petrol stations in the area to Tesoro, a Texas-based company that becomes the second biggest refiner on the US west coast as a result of the deal. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “The Australian: US may punish Shell for Iran deal”

Leave a Comment

%d bloggers like this: