Shell's Reluctance to Purchase Oil from Iran After Sanctions Lifted

The oil company "Royal Dutch Shell" has purchased only three oil shipments from Iran in the past year since sanctions against the country were lifted. Reuters reports that this amount is a tiny fraction of what the major oil company used to buy from the Islamic Republic before the sanctions were imposed, indicating ongoing legal issues and high prices that remain barriers to trade. According to Reuters, the Dutch-British company has not provided a reason for the decrease in its purchases from Iran, which is mentioned in the company's annual report. Despite Shell's refusal to comment on the low volume of purchases from Iran, oil trade sources state that Iranian oil is excessively expensive, and remaining sanctions have turned dealings with the Islamic Republic into a "legal minefield." The report discusses legal issues related to sanctions, noting that Shell's archived documents show the company was forced to disclose minimal information about payments made for travel tickets purchased by its employees from Iranian airlines. Following the nuclear agreement, the European Union lifted sanctions against Iran in January 2016, and the United States also removed some restrictions on dollar transactions with the country, ultimately allowing for a significant increase in Iran's oil exports. Although Iranian oil trade with Asian and European customers saw significant growth last year, many major oil companies under U.S. jurisdiction remain cautious about purchasing Iranian oil. Reuters notes that the Trump administration previously imposed new sanctions against Tehran earlier this month following a recent ballistic missile test in Iran. Facing sanctions can be very costly; in 2014, the French bank "BNP Paribas" paid approximately $9 billion in fines to resolve allegations of ignoring U.S. sanctions against several countries, including Iran. Last month, Iran announced that U.S. sanctions make cooperation with American companies in the energy sector impossible. Over the past year, Total has been the only major oil company to resume crude oil purchases from Iran at volumes comparable to pre-sanction levels. The largest French oil company is seeking to sign a new contract with Iran to develop its oil and gas fields. According to Shell's annual report, the company purchased only three oil shipments from Iran last year. These purchases included one worth $45 million in May, generating a profit of $1.1 million for Shell, followed by two shipments in December worth $103 million and $106 million, respectively. In 2016, Shell paid $1.942 billion of its overdue debts from purchases made before the intensification of EU sanctions against Iran in 2012. At that time, Shell was purchasing 200,000 barrels of oil daily or six large oil shipments monthly from Iran. Despite the lifting of some U.S. restrictions on dollar transactions with Iran, Shell has stated that none of its payments were made using dollars. Despite all these challenges, the company announced that it reopened its office in Tehran last year and signed several non-binding memoranda of understanding for cooperation with the National Iranian Oil Company to develop the petrochemical, oil, and gas sectors. In this context, Shell and Total are signing three oil agreements with Iran. The International Energy Agency predicts a doubling of OPEC's production growth by 2022. The National Petrochemical Company of Iran has signed a memorandum of understanding with Royal Dutch Shell. Investment in oil in Iran after crude oil purchases? Explanation from a government official regarding the sale of Iranian oil to Shell.