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Shell and BP make new inroads in Iran Shell and BP make new inroads in Iran
(about 1 hour later)
The possibility of a major British oil company regaining access to one of the world’s great hydrocarbon markets rose on Friday with officials in Tehran saying Shell would be allowed to build 100 petrol stations in Iran.The possibility of a major British oil company regaining access to one of the world’s great hydrocarbon markets rose on Friday with officials in Tehran saying Shell would be allowed to build 100 petrol stations in Iran.
In a separate move, BP confirmed that it had sent a team of managers to a country which has been out of bounds since western sanctions were imposed over Iran’s nuclear programme.In a separate move, BP confirmed that it had sent a team of managers to a country which has been out of bounds since western sanctions were imposed over Iran’s nuclear programme.
These developments coincided with the arrival of a 30-member delegation of UK businesses in the Iranian capital for a four-day visit to meet officials.These developments coincided with the arrival of a 30-member delegation of UK businesses in the Iranian capital for a four-day visit to meet officials.
Despite an agreement in July between Iran and the west over the curbing of Tehran’s nuclear programme, European Union sanctions are still in place but Iran is pushing to get them lifted as soon as possible.Despite an agreement in July between Iran and the west over the curbing of Tehran’s nuclear programme, European Union sanctions are still in place but Iran is pushing to get them lifted as soon as possible.
Iran is one of the world’s biggest hydrocarbon producers but is struggling in a world of low oil prices. It has been traditionally wary of foreign firms but would like western technology and knowhow to raise oil and gas production.Iran is one of the world’s biggest hydrocarbon producers but is struggling in a world of low oil prices. It has been traditionally wary of foreign firms but would like western technology and knowhow to raise oil and gas production.
With relations between Washington and Tehran thawing fast, a race is on among the large US and European oil companies to position themselves positively with Iran before sanctions are formally dropped so that concrete deals can be done.With relations between Washington and Tehran thawing fast, a race is on among the large US and European oil companies to position themselves positively with Iran before sanctions are formally dropped so that concrete deals can be done.
Bijan Haj Mohammadreza, the head of Iran’s filling stations union, was quoted prominently by the state-run Press TV as saying that the country had shown the green light to Shell and Total of France to each build 100 service stations.Bijan Haj Mohammadreza, the head of Iran’s filling stations union, was quoted prominently by the state-run Press TV as saying that the country had shown the green light to Shell and Total of France to each build 100 service stations.
Shell, which went on a visit to Tehran with a British government mission to open the UK embassy there in August, said it was unaware of any further developments there.Shell, which went on a visit to Tehran with a British government mission to open the UK embassy there in August, said it was unaware of any further developments there.
A Shell spokesman in London said: “We have not sought, or been granted, any licences to operate retail sites in Iran. We remain in full compliance with all international sanctions.”A Shell spokesman in London said: “We have not sought, or been granted, any licences to operate retail sites in Iran. We remain in full compliance with all international sanctions.”
But if any such deal were to be agreed, it would mark the first time Iran would overcome its previous reluctance to allow foreign companies access to its retail energy market. Trade union officials have significant influence in the signing of such agreements.But if any such deal were to be agreed, it would mark the first time Iran would overcome its previous reluctance to allow foreign companies access to its retail energy market. Trade union officials have significant influence in the signing of such agreements.
BP, which started life as the Anglo-Persian Oil company through its assets in the Middle East country, sent technical and commercial managers on a fact-finding mission to the country last month.BP, which started life as the Anglo-Persian Oil company through its assets in the Middle East country, sent technical and commercial managers on a fact-finding mission to the country last month.
A spokesman for the company said: “BP has met with oil industry officials in Iran recently. The details of those discussions are confidential. We have said for some time that we would be interested in reviewing opportunities in Iran once sanctions permit it. We are fully in compliance with the current sanctions regimes in place.”A spokesman for the company said: “BP has met with oil industry officials in Iran recently. The details of those discussions are confidential. We have said for some time that we would be interested in reviewing opportunities in Iran once sanctions permit it. We are fully in compliance with the current sanctions regimes in place.”
Iran has some of the largest oil and gas reserves in the world which can be accessed at a relatively cheap cost. The oil industry was nationalised in the late 1970s, ending BP’s involvement in production from Iran.Iran has some of the largest oil and gas reserves in the world which can be accessed at a relatively cheap cost. The oil industry was nationalised in the late 1970s, ending BP’s involvement in production from Iran.
The British company traded crude and products with Iran more recently until western sanctions put an end to this too in 2011. Shell re-entered Iran in the 1990s but withdrew again when sanctions were introduced.The British company traded crude and products with Iran more recently until western sanctions put an end to this too in 2011. Shell re-entered Iran in the 1990s but withdrew again when sanctions were introduced.
Abbas Beyad, international business development executive at the drilling support company, Britannia Petroleum, said his firm had visited Iran several times this year and was hoping to be part of another trade mission expected to be led by the chancellor George Osborne early next year.Abbas Beyad, international business development executive at the drilling support company, Britannia Petroleum, said his firm had visited Iran several times this year and was hoping to be part of another trade mission expected to be led by the chancellor George Osborne early next year.
“The nuclear agreement with Iran has effectively opened up a sleeping giant and the last major untapped emerging market economy,” he said. “A $400bn (£263bn) economy even with the most crippling and extensive sanctions imposed on any country, Iran has the potential to become a G20 country within a short space of time once the sanctions are removed after implementation day.”“The nuclear agreement with Iran has effectively opened up a sleeping giant and the last major untapped emerging market economy,” he said. “A $400bn (£263bn) economy even with the most crippling and extensive sanctions imposed on any country, Iran has the potential to become a G20 country within a short space of time once the sanctions are removed after implementation day.”
Shaistah Akhtar, partner at law firm King & Wood Mallesons, said it was important to remember that sanctions remained in place and the EU and US authorities were committed to their enforcement.Shaistah Akhtar, partner at law firm King & Wood Mallesons, said it was important to remember that sanctions remained in place and the EU and US authorities were committed to their enforcement.
“Roadblocks remain for a number of reasons –ultimately, all of the existing restrictive measures can be reinstated – the so-called ‘snap back’ provisions,” she said. “It is this possibility that is making businesses tread carefully with respect to Iran and include full and robust contractual protections in the event that sanctions are reimposed. Iran also remains a high risk jurisdiction. “Roadblocks remain for a number of reasons – ultimately, all of the existing restrictive measures can be reinstated – the so-called ‘snap back’ provisions,” she said. “It is this possibility that is making businesses tread carefully with respect to Iran and include full and robust contractual protections in the event that sanctions are reimposed. Iran also remains a high-risk jurisdiction.
“Banks and other financial institutions, which have spent recent years ‘de-risking’ and stopping all business with certain high risk/sanctions countries, are likely to remain reluctant to handle Iran-related transactions, especially while US sanctions remain in force. Indeed, it may be a breach of strict banking/finance covenants to enter into any sort of Iranian business.” “Banks and other financial institutions, which have spent recent years ‘de-risking’ and stopping all business with certain high-risk/sanctions countries, are likely to remain reluctant to handle Iran-related transactions, especially while US sanctions remain in force. Indeed, it may be a breach of strict banking/finance covenants to enter into any sort of Iranian business.”