Shell reveals Iranian oil trade loss, $2.3 bln Iran debt

Wed Mar 20, 2013 10:11am EDT

* Made loss on Iranian oil trading shortly before embargo

* Cannot pay $2.3 bln to Tehran due to sanctions

* Previous attempts to settle debt failed to get approval

By Dmitry Zhdannikov

LONDON, March 20 (Reuters) - Oil major Royal Dutch Shell lost money trading Iranian crude in 2012 shortly before a European Union embargo and still owes $2.3 billion to Tehran for oil purchases.

The details, revealed in Shell regulatory filings, is the first disclosure of its dealings with Iran in 2012, when it kept buying Tehran's oil right up to the mid-year EU embargo deadline.

The loss raises questions about Shell's decision to continue trading with Iran in the first half of 2012, taking advantage of an exception for pre-existing contracts, when many of its rivals had stopped.

The firm said its trading division generated a gross revenue of $481 million in 2012 on Iranian oil purchases and a net loss of $6 million. Condensate and fuel oil purchases from Iran generated a gross revenue of $631 million and a net profit of $4 million, failing to compensate for the loss in crude.

"None of these purchases has been paid for, and all contracts were terminated and activities ceased before June 28, 2012," said Shell referring to the date when sanctions on Iranian oil came into force.

"Currently, we have approximately $2,336 million payable to, and $11 million receivable from, National Iranian Oil Company. We are unable to settle the payable position as a result of applicable sanctions," Shell said.

Shell suspended all trade with Iran before June but failed to settle its accounts with the National Iranian Oil Company (NIOC) ahead of the embargo, which was imposed as part of the West's standoff with Iran over Tehran's nuclear programme.

Shell ceased upstream activities and suspended new business developments in Iran back in 2010 and is closing its representative office in Iran, it said.

REPAYMENT DILEMMA

Shell said it would not comment further on its trading with Iran in 2012 and could not comment on how it planned to repay its debt to Tehran.

Industry sources previously told Reuters the company was working on a number of options including a grain barter deal via U.S. agribusiness giant Cargill.

The deal was blocked by authorities in Europe and the United States. It came after Shell was denied permission by the British government to pay Tehran direct via bank transfer. Sanctions bar European banks routing payments for oil back to Iran.

Shell was among critics of the EU embargo with its chief executive Peter Voser saying last year that "from a pure commercial prospective" EU consumers would be the main losers because the embargo would mean higher prices.

While oil prices recorded an all-time high average in 2012 of above $111 a barrel, prices fell from a peak near $130 in April after Saudi Arabia opened the taps and a boom in U.S. shale oil production offset fears about the loss Iran's supply.

Iranian output more than halved to around 1 million bpd, down from 2.5 million bpd before the sanctions.

At the beginning of 2012, chief executive of Shell's rival Total, Christophe de Margerie, also cast doubt about sanctions, saying Iran would reroute its oil to other markets.

Total stopped buying Iranian oil at the start of 2012 despite buying big volumes in 2011, when it purchased 49 million barrels of oil and refined products worth 3.7 billion euros ($4.81 billion).

Italy's Eni purchased over 7 million barrels of Iranian oil in 2011 paying $742 million.

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Comments (4)
Logical123 wrote:
Just another example of the Western policy of robbing Middle Eastern countries. When you owe more than $2B and you don’t pay (OK, supposedly you cannot pay), that is essentially the same as stealing.

Mar 20, 2013 12:47pm EDT  --  Report as abuse
mahan99 wrote:
So Shell took oil and did not pay for it and now is hiding behind sanctions as the basis for being unable to pay. How convenient? Hopefully, the shareholders of Shell will not be too upset when the Iranians lob a couple of missiles at Shell oil facilities in its neighborhood. There are two words to describe Shell in this matter: THIEF and OPPORTUNIST! I am sure we have not heard the last of this…. those missiles are en-route now probably.

Mar 20, 2013 2:27pm EDT  --  Report as abuse
Any opportunity to steal money eh? “We can’t pay $2.3 billion that we OWE Iran due to sanctions”. That’s rich. I don’t remember you money-hungry bastards NOT charging the customers when you sold this stolen oil.

Mar 20, 2013 4:44pm EDT  --  Report as abuse
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