It has been confirmed that Shell and Repsol-YPF are to exit phase 13 of Iran’s $10 billion Persian LNG scheme, obtaining the option to return at later stages of the project. Despite speculation claiming the companies would pullout of operations in Iran, Shell and Repsol have decided to postpone their involvement in light of the current political situation.
Iran has suffered over the last two years due to US and UN sanctions, which have made foreign investment in the oil and gas industry increasingly difficult. However, the majors have been reluctant to withdraw operations in Iran due to the potential of future projects.
Global Insight’s Middle East energy analyst Samuel Ciszuc said the companies were, “keeping their foot in the door by continuing to hold their contracts, while actually doing as little as possible and stalling on decisions.” The explanation for this strategy according to Ciszuc is that Iran remains “a very promising place to be”, despite the country’s problems.
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The decision is yet another setback for Iran, which is in need of foreign expertise and investment to reinvigorate the oil and gas sector. “Iran desperately lacks the required technology and know-how which-as yet-only the majors tend to have,” said Ciszuc.
