Shell, Total Sign Agreements
with Iranian Chemical Producer
Iran reportedly hoped to develop $185 billion in new oil and gas
projects over the next five
years, while oil ministers expect the nation’s petrochemical production
to more than double in the next decade.
Royal Dutch Shell apparently hopes to capitalize on the growth of Iran’s
petrochemical sector following the lifting of international sanctions.
In early October, the energy giant signed a preliminary memorandum of
understanding to cooperate with Iran’s state-owned petrochemical company.
“We believe that we can have joint projects in the petrochemical field with
the National Petrochemical Company,” Hans Nijkamp, who heads Shell’s Iranian
affairs department, was quoted by the Iranian media as saying.
Sanctions against Iran were lifted early this
year in the wake of an agreement on the country’s nuclear program, which
prompted overseas energy companies previously restricted from operating in
Iran to explore investments in its massive petroleum sector.
Iran reportedly hoped to develop $185 billion in new oil and gas projects
over the next five years, while oil ministers expect the nation’s
petrochemical production to more than double in the next decade.
Officials added that petrochemical projects — including those with Shell —
could become operational more quickly than those in the energy sector.
“With the wisdom that we see in the people working in our country’s
petrochemical industry, without a doubt the projects of this company will be
executed sooner than oil and gas projects,” said Amir-Hossein Zamaninia, a
deputy oil minister.
In related news, Director of Investment at National Petrochemical Company
(NPC) Hossein Alimorad pointed to Shell’s plan to return to Iran.
“No details have been unveiled in the draft contract as it would restrict
the agreement,” highlighted the official noting that both sides are allowed
to define areas of mutual cooperation.
He went on to note that Shell held ties with Iran in Gas to Liquids (GTL)
refinery process before sanction years expressing hope that signing the
primary MoU will deal with the unfinished project of producing natural gas
The NPC Managing Director Marzieh Shah-Daei and President of Department for
Iran Affairs in Royal Dutch Shell Hans Nijkamp inked an MoU on October 9.
$2b Investment by Total
Meanwhile, France’s giant oil and gas company Total will finalize a $2
billion investment deal with Iran by the end of the current Iranian calendar
year (March 20, 2017).
Adel Nejad-Salim, the managing director of Persian Gulf Petrochemical
Industries Company (PGPIC), said the French company is going to invest in a
downstream olefin project.
“In recent months, Total has assessed petrochemical projects in Iran and
reviewed the status of feedstock. Now, their final plan is ready and the
contract will be finalized in near future,” the official said.
After the implementation of Joint Comprehensive Plan of Action (JCPOA), Iran
and France’s Total signed an MOU based on which, Total will invest in Iran’s
With the uplifting of the Western sanctions in January Iran aims to pump
crude at pre-sanction levels.
Shah-Daei stated Iran’s plans of expanding its petrochemical production to
160 million tons from the existing 60 million tons over the next ten years.
To boost its production, the company has already formed alliances with the
Oil Firms Present Proposals for Iran Projects
Iran has received the first wave of proposals by major international
companies to develop oil and gas projects within the new format of oil
contracts recently approved by the administration of President Hassan
At least 10 companies have so far submitted their proposals to Iran’s
Ministry of Petroleum for development of 15 projects.
They include big European names such as Total, Lukoil, Shell, Eni, OMV and
Asian giants like CNPC, Sinopec and Pertamina.
Several of the key projects that the companies have targeted are the same
ones they had been previously involved in or for which they had been
negotiating with Iran in the past.
The most lucrative project up for the grabs may be South Azadegan for which
Total has presented its proposal.
South Azadegan was discovered in 2001 in what was described at the time as
the world’s biggest oil find in decades.
Next in line could be Yadavaran for which both Shell and Sinopec have
presented their proposals.
Total and Shell had been negotiating with the National Iranian Oil Company (NIOC)
in early 2000s over the development of South Azadegan and Yadavaran but
their talks did not lead to an agreement.
Shell has also bid for re-development of Soroush oil field – located in the
Persian Gulf - which it had previously developed in early 2000s.
Total, Eni and Hyundai have presented proposals for unspecified phases of
South Pars gas field. Total was already involved in the development of
South Pars Phases 2 and 3. Eni was involved in the development of Phases 4
and 5 and Hyundai in Phases 4, 5 and 6.
Iran’s new format of oil contracts is replacing buyback deals. Under a
buyback deal, the host government agrees to pay the contractor an agreed
price for all volumes of hydrocarbons the contractor produces.
But under the new contracts, the NIOC will set up joint ventures for crude
oil and gas production with international companies which will be paid with
a share of the output.
Under the new contracts, different stages of exploration, development and
production will be offered to contractors as an integrated package, with the
emphasis laid on enhanced and improved recovery.