Royal Dutch Shell and Iran Set to Renew Ties
With Iran emerging from years of punishing economic sanctions that directly affected their ability to sell oil, Royal Dutch Shell announced on December 7 that they’ll take a key role in the expanded development of three of the countries’ oil fields.
Those sanctions were lifted in January, with a number of other oil firms also moving into to take advantage of the ample supply of petroleum available. The enthusiasm comes even as the oil slump that’s plagued the industry since mid-2014 continues to drag on with no apparent end in sight.
Shell, which shut down its Iranian operations in 2010, will be evaluating two oil fields near the country’s border with Iraq, the Yadavaran field and the Azadegan. In addition, the Kish gas deposit will also be assessed from its location in the Persian Gulf. All of the work will be on behalf of National Iranian Oil Company.
The Azadegan field is the largest in the country and when its potential is combined with the Yadavaran, it constitutes the equivalent of 15 percent of the proven reserves within the entire United States. The Chinese oil giant, Sinopec, has had ongoing production there for years and is looking to increase their development in the region.
While the deal is a provisional agreement and doesn’t actually involve any financial investment from Shell, the prospect of it being scuttled by the foreign policy of incoming United States President-Elect Donald Trump still exists. That’s because Trump has pledged to tear up the nuclear agreement between the United States and Iran, which could lead to economic reprisals by the Iranians.
Another potential problem is that Shell could find itself working the Azadegan together with members of Iran’s Revolutionary Guard. That connection would put them in violation of American law.