Shell, Total Eye Iran Deals Despite Uncertainty Over Trump -- Update
December 07 2016 - 4:17AM
Dow Jones News
By Benoit Faucon
Royal Dutch Shell PLC is expected to agree on Wednesday to
develop a major Iranian oil field, a spokeswoman for the country's
oil ministry said, signaling that giant energy companies won't be
deterred by President-elect Donald Trump's pledge to undo the Iran
nuclear deal.
Total SA of France on Wednesday is also planning to sign on to
its second big Iranian energy development, the spokeswoman told The
Wall Street Journal. Total was the first large energy company to
jump back into Iran with a major project, announced on Nov.
8--Election Day in the U.S.
The deals are a breakthrough for Iran's energy industry, which
has been slow to attract investments from the world's biggest oil
companies since the U.S. and other world powers lifted sanctions
related to Tehran's nuclear program. The continued existence of
separate U.S. sanctions on Iran over terrorism, human rights and
weapons has impeded investment, while oil companies in particular
are concerned with the terms Iran wants to impose on foreign
companies.
Shell declined to comment. Total didn't immediately respond to
requests for comment. The Iranian spokeswoman said an announcement
would be made in Tehran at 2 p.m. local time (10:30 a.m. GMT).
The announcement will be for a so-called "heads of agreement," a
nonbinding pact that falls short of a contract but publicly commits
the companies to begin hashing out a partnership with Iran's state
oil company. The spokeswoman didn't disclose whether the companies
were committing to an amount of spending
The plans open both companies to potential risks from an
incoming Trump administration. Mr. Trump has called the Iran
nuclear pact a "disaster" and "the worst deal ever negotiated," and
he has vowed to renegotiate it or pull out altogether.
The Republican president-elect has been willing to take on
corporate decision-making in unusually aggressive style, singling
out companies that plan to move jobs to Mexico and calling out
Boeing Co. for apparent cost overruns in building a new Air Force
One jet.
Though Total is French and Shell is jointly headquartered in
London and The Hague, both companies have substantial American
operations. Wednesday's planned agreements suggest the oil
companies believe they can work in Iran and handle any fallout with
the incoming administration.
In an interview last week, Arnaud Breuillac, Total's head of
exploration and production, said he was "not particularly" worried
about a Trump administration impeding his company's Iran plans. The
comments came after Mr. Breuillac met Iran's oil minister Bijan
Zanganeh in Vienna.
The announcement comes a week after the Organization of the
Petroleum Exporting Countries agreed to cut production in a move to
rebalance global oil supply in line with demand. Oil prices have
surged since the deal, lifting hope of a sustained oil market rally
and new investment in the beleaguered energy industry.
The agreements are to develop the South Azadegan and Yadavaran
oil fields, which are both large-scale projects important to the
future of Iran's oil industry.
The fields are among the largest oil discoveries of the past 20
years, said Homayoun Falakshahi, Middle East research analyst at
energy consultancy Wood Mackenzie. Azadegan is the largest field in
Iran and the two reservoirs have combined recoverable resources of
8.2 billion barrels--the equivalent of 15% of the U.S.' proved
crude reserves.
The spokeswoman said Total was also likely to sign up for the
Kish oil and gas project offshore Iran. She didn't provide more
details.
Write to Benoit Faucon at benoit.faucon@wsj.com
(END) Dow Jones Newswires
December 07, 2016 05:02 ET (10:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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