AP NEWS
Related topics

Shell Bids For Oil-Development Contract In Iran

April 28, 1995

The Royal Dutch-Shell Group is engaged in talks with the state-owned National Iranian Oil Company, Shell said Friday.

But the Anglo-Dutch company would not confirm reports that it is bidding for the same $1 billion contract with Conoco Inc. that was blocked by President Clinton earlier this year.

The Islamic Republic News Agency said Thursday that negotiations between Iran and the Anglo-Dutch firm are under way and that a Shell delegation will travel to Iran soon for further talks.

The company through a spokesman in London said Friday it had no information on such a visit.

It was the first time that the Iranians have named Shell as a bidder since Conoco was barred last month from the pact by an executive order, which prevents U.S. citizens and firms from signing contracts to finance, supervise or manage oil projects in Iran.

Conoco Iran NV, a Dutch affiliate of the Houston-based company, won the deal to develop two offshore oil fields _ Sirri-a and Sirri-e in the southern Persian Gulf _ after four years of talks that cost the company $10 million to $15 million.

Conoco, which is owned by DuPont Co., said Friday it would not comment on the report.

Iran is now involved in negotiations with other companies, including France’s Total SA and Indonesia’s Petronas, and expects a deal to come in the next two months, the Islamic agency news report said.

The report was an indication that Washington’s restrictions on business dealings with Iran were hurting U.S. firms, not Tehran, which can find other options through ties with non-American companies.

``There is no doubt that American companies are getting hurt by these sanctions,″ said Cheryl Trench, executive vice president at the Petroleum Information Research Foundation, an industry watch-dog group in New York. ``These circumstances are a perfect example of how a U.S. company can lose out on a huge deal.″

Iran had predicted the deal would generate $12.5 billion in oil exports and $250 million in natural gas exports.

Iran is burdened with $30 billion in foreign debt, and low oil prices have hurt its economy. Tehran It is desperately looking for ways to generate income.

Despite trade restrictions dating back to the 1979 Islamic Revolution, when militants stormed the U.S. Embassy and held 52 hostages for 444 days, American companies have taken part in Iranian oil deals through overseas subsidiaries.

U.S. companies last year purchased about $3.5 billion of Iranian oil for refining, resale or trade outside the United States.

Industry analysts said the sanctions put American companies at a disadvantage on the world market.

``American companies can’t compete and that will hurt them in the end,″ said John Hervey, an oil company analyst at Donaldson, Lufkin & Jenrette Inc. in New York.

The United States considers Iran a rogue state and sponsor of international terrorism. It accuses Tehran of seeking to undermine the Arab-Israeli peace process by arming and financing Islamic fundamentalists.

Washington has sought to convince other governments to refrain from doing business with Iran, hoping an economic squeeze will force Tehran to moderate its foreign policy.

The campaign has slowed foreign lending to Iran, but business with European countries and Japan continues to flourish.

AP RADIO
Update hourly