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We are engaged, Shell says after Iranian deal

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“Shell continues to comply with all relevant international sanctions”

By Daniel J. Graeber

DUBAI, United Arab Emirates, July 14 (UPI) — With a nuclear deal in hand, Royal Dutch Shell said Tuesday it’s exploring the “immediate and long-term” implication of an opening Iranian oil door.

Representatives from the five permanent members of the U.N. Security Council, Germany and Iran announced the signing of a breakthrough agreement that pulls Iran back from the brink of developing a nuclear weapons program in exchange for sweeping and staged relief from economic sanctions.

Nureddin Wefati, a spokesperson for Middle East operations at Shell, said in response to email questions his company was setting the early stage for working with or in Iran.

“We are engaging with relevant governments to understand the immediate and long term impact of the latest agreement on the sanction regime, understanding that further steps are required before any sanctions are lifted or suspended,” he said.

During the negotiating phase, Iranian officials said they were vetting interest from energy companies eager to return to the country. A Shell spokesman in June confirmed to UPI the Dutch supermajor was among that group, noting it was exploring potential areas of cooperation in the event that sanctions are lifted.

Documents related to the deal Tuesday said European sanctions on imports of Iranian oil, exports of key technology and investments in the Iranian oil sector in general were set for release. U.S. lawmakers have 60 days to review the agreement, though President Barack Obama said Tuesday he’d sanction anything but congressional approval.

Jamie Webster, a research director at IHS Energy, said there were still logistical hurdles for potential investors.

“You’ve got sanctions to unwind before you can invest plus companies need to strike a deal with Iran,” he said in response to email questions.

Firas Abi Ali, head of Middle East Analysis at IHS, said in a research note the business climate in Iran will not change overnight. The country’s legal system is outdated and many of the Iranian players themselves lack experience in dealing with international investors.

Shell maintained oil ties to Iran through pre-existing contracts before the European Union placed an embargo on Iranian crude oil mid-2012.

“Shell continues to comply with all relevant international sanctions,” Wefati said. “At the same time, strictly within the boundaries of the law, we are interested in exploring the role Shell can play in developing Iran’s energy potential.”

Exxon Mobil in May said it was monitoring ongoing nuclear negotiations, but added it was “not lobbying on Iran sanctions.” A spokesman for BP said in Tuesday statement to UPI the company would “look at opportunities [in Iran] once able to do so.”

Iranian oil production dropped from around 3.6 million barrels per day in 2011 to around 2.8 million bpd as of June 2015 in part as a result of sanctions pressure. Exports were limited to around 1 million bpd, about half of Iran’s full potential.

Research from investment firm ING finds Iranian oil exports could spike “in theory,” though there are some technical and political obstacles.

“The number of hurdles ahead is not negligible,” Hamza Khan, the head of ING commodities research, said in an emailed statement.

The Organization of Petroleum Exporting Countries, of which Iran is a member, indicated in its latest monthly market report Iran’s oil production has held steady for the better part of a year. By next year, OPEC said Iran is expected to contribute to the bulk of the overall increase in production from member states.

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