Shell pulls out of Iran gas deal

Pressure from US politicians leads to decision; Iran may now look to Russian, Chinese companies.

Iran natural gas 248.88 (photo credit: AP)
Iran natural gas 248.88
(photo credit: AP)
The British and Royal Dutch Shell, which ranks as the second largest non-governmental oil company in the world, has decided to pull out of a planned gas deal in Iran. The alleged reason is pressure from US politicians to divest from Iran in efforts to penalize the country for running a supposed nuclear weapons program. The deal was signed in 2002 for the development of a gas field in southern Iran. The planned project would have seen the gas cooled and turned, after extraction, into liquid natural gas (LNG) for transport in tankers. Iran will now have to find a new partner for the project and companies from countries where the US political influence is more limited - such as Russia, India and China - are now lining up to step in. However, these companies, including Russia's Gazprom and India's Indian Oil Corp, have less experience with these types of projects than Shell. US pressure on Iran has been mounting during the last couple of years due to concerns about Tehran's nuclear program, which it claims is for the peaceful purpose of power production. Washington, on the other hand, is claiming the goal of the program is the production of nuclear weapons. At the moment Iran is under limited United Nations sanctions for its unwillingness to ban UN inspection of its nuclear sites. The US has independently added additional sanctions, ranging from the ban on transactions with two Iranian banks accused of facilitating financial transactions for the government to prohibiting export of airplane parts and barring US companies from doing business in Iran. The standoff between the US and Iran is among the chief reasons for the rising tension in the Gulf, as some fear it might end up in an armed confrontation, which would severely hamper the export of oil from the region. Iran has also refused to increase its oil production within the framework of the Organization of the Petroleum Exporting Counties (OPEC), which would lower the price of oil, which on Sunday stood at a record level of $126 a barrel.