Royal Dutch Shell Plc  .com Rotating Header Image German firm signs major Iran gas deal

Mon, 05 Mar 2007 09:01:54 

Germany’s largest natural gas provider E.ON AG reportedly reached an agreement with Iran for annual delivery of 2.5 billion cubic meters of natural gas.

The deal would need the approval of the German government, Focus Magazine reports.

According to the report, E.ON has already submitted a copy of the agreement to the German government and members of the Chancellor’s cabinet, as well as the Foreign Ministry and the Economy Ministry.

Long-term contracts of this nature require approval from the German Federal Office of Economics and Export Control.

“There is nothing that would specifically prohibit [E.ON from signing the deal with] Iran, nonetheless the request is rather explosive,” Focus Magazine quoted an unnamed German government official as saying.

Several major European energy firms have shown interest in recent months to enter into gas deals with Iran despite mounting political and economic pressure on Tehran from the United States and its European Union allies over its nuclear program.

A leading UK energy group said Sunday it was warned by the British government not to conduct business with Iran when seeking future supplies of gas for its 16 million UK customers.

Jake Ulrich, managing director of Centrica Energy, the exploration and production arm of the giant energy group Centrica, says it has been advised by the UK Foreign Office against seeking a long-term supply deal with the National Iranian Oil Company.

Centrica however believes Iran, which has the world’s second largest gas reserves, will be one of its major suppliers of gas by 2020, when the UK becomes dependent on imports for up to 90 percent of its supply, The Observer reported Sunday.

Other UK companies have reportedly received similar warnings from the British government. Centrica and its competitors however are not alone in the sensitive issue of seeking business relationships with Iran.

In January, U.S. State Department officials said a $10-billion agreement allowing Shell Oil and the Spanish company Repsol to develop Iran’s giant South Pars gas field could lead to an investigation by U.S. authorities as well as possible future sanctions against the companies.

Iran has the world’s second largest gas reserves after Russia. The country is also the world’s fourth largest oil producer.


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