Shell and Repsol have reportedly signed a preliminary deal with the National Iranian Oil Company (NIOC) in 2007, according to which the companies were to help develop phases 13 and 14 of the project by contributing the gas. However, on May 11, 2008, Shell has reportedly said that it was pulling out of phase 13 because it could not meet the Iranian requirements to develop the block quickly.
While the two companies maintain that they are likely to participate in projects covering other phases, the move is being seen as part of America’s plan to pressurize companies into stopping their operations in Iran and isolate the country for having refused to end its nuclear program. Both Shell and Repsol refused to comment.
According to people who are familiar with the developments, the decision is reported to have stemmed out of geopolitical uncertainty and soaring costs. The European companies are likely to continue to act in a technical advisory role on phase 13.
It is claimed that Iran had been pushing the two European companies to finalize the deal since phase 13 is located on the South Pars border with Qatar, which has already started pumping gas from its side. However, the two companies along with the French company Total, which is reportedly managing phases 11 and 12, had been given a June 2008 deadline for finalizing their contracts.
It is likely that Shell and Repsol may consider developing phases 20 and 21 of South Pars instead of phases 13 and 14. However, it will be another decade for the blocks to become operational.
Shell has agreed the principle of substitution of alternative later phases for the Persian LNG project so that NIOC can proceed with the immediate development of phase 13, The Financial Times quoted Shell as saying.
