Royal Dutch Shell has signed a provisional agreement to develop oil and gas fields in Iran, a move that could signal energy companies will not be deterred from doing business with the Islamic Republic despite uncertainty whether a Trump administration will scrap a nuclear deal agreed to by world powers.
A spokesman for Shell said a memorandum of agreement was signed Wednesday with the National Iranian Oil Co. “to further explore areas of potential cooperation.” The agreement is nonbinding and involves the development of Iran’s oil fields in South Azadegan and Yadavaran and the Kish gas field, according to Reuters. The South Azadegan and Yadavaran fields straddle the border with Iraq.
Royal Dutch Shell is based in the Netherlands but has operations in the U.S. It is the largest energy company to venture back into Iran since sanctions were lifted after a nuclear deal was implemented in January. It’s a move that could signal the controversial deal will remain intact despite threats to renegotiate or scrap it by President-elect Donald Trump, who has called the deal, signed by six world powers in late 2015, a “disaster” and the “worst deal ever negotiated.”
French energy company Total also signed a deal last month to develop a large gas field in Iran and is now negotiating an oil deal. Despite the nuclear agreement, doing business in Iran is a challenge for Western companies. This is in large part due to residual U.S. sanctions that don’t allow American banks to be involved in any transactions.
Iran has the fourth-largest oil reserves in the world and is now producing more than 3.5 million barrels a day despite its aging infrastructure. As NPR has reported, Iran’s oil production has bounced back faster than most analysts expected.