Shell finalises $2.3 billion debt payment to Iran

The National Iranian Oil Company (NIOC) and Royal Dutch Shell have reached a final deal on how the Anglo-Dutch company must clear its debt of $2.3 billion outstanding since 2011, according to an NIOC official.

The Head of NIOC’s international affairs Mohsen Qamsari was quoted as saying the two sides agreed on a mechanism after several rounds of negotiations, paving the way for resumption of oil purchases from Iran by Shell.
“The payment of the outstanding debt by this British company immediately after the annulment of sanctions has been finalized,” Qamsari said in remarks quoted by the Mehr news agency.
“The resumption of Iranian crude oil sales to the company is conditional to the clearance of the past debts,” he added.

The debt stems from Iranian oil deliveries in 2011 and 2012 that Shell was unable to pay because of the sanctions. In 2013, the UK government reportedly blocked efforts by Shell to settle the debt by paying in kind with grains or pharmaceuticals.

At the time, Shell explored with the British government the possibility of asking pharmaceuticals maker GSK to deliver medicines to Iran in a payment-in-kind deal but the request was rejected, Reuters said then.

Food and medicine were among the humanitarian goods supposedly not barred by sanctions but the UK government was reluctant to provide relief for Iran when Western powers were using sanctions to pressure Tehran.

The oil company wanted to repay its debt to NIOC to maintain cordial relations with Iran, Reuters said. Shell revealed in a filing to US authorities that it made a net loss of $6 million trading Iranian oil in 2012.

Shell Executive Vice President for business development, Ed Daniels visited Tehran in August along with other business leaders and diplomats including Foreign Secretary Philip Hammond who oversaw the reopening of the British embassy.

Shell was involved in the development of the Persian Gulf oilfields of Soroush and Norouz and was tipped to develop Persian LNG in South Pars in a project that was eventually scrapped mainly because of sanctions.

In October, Iranian media reported that Shell together with Total had received the license to establish 100 gas stations each across Iran thus becoming the first foreign companies ever to win access to Iran’s retail energy market.