Iran Ends Talks With Shell, Repsol on South Pars Gas Project

June 6 (Bloomberg) -- Iran ended talks with Royal Dutch Shell Plc and Repsol YPF SA about developing two phases of its South Pars natural-gas field and will award the rights instead to an Iranian group, the state-run Mehr news agency reported.

Oil Minister Masoud Mir-Kazemi “has ordered an end to talks with Shell and Repsol over development of phases 13 and 14 of the South Pars gas field,” Mehr reported late yesterday. South Pars, which Iran shares with neighboring Qatar, contains the world’s largest gas deposit.

European energy companies including Shell and Repsol have postponed gas accords in Iran amid U.S. pressure over its nuclear program. Shell and Repsol have for several years discussed developing two blocks of the South Pars field and building what would be Iran’s first liquefied natural gas plant. Iran has the world’s second-largest gas reserves after Russia.

The exploration and production work of these phases will be awarded to the Iranian Khatam-ol-Osea group for $5 billion, Mehr said.

Iran in April gave Shell, Europe’s largest oil producer, and Spain’s Repsol YPF SA one week to decide about a proposal to develop these two phases of South Pars. Iran might, in the absence of an accord, award development contracts to domestic companies without first holding tenders, state-run Pars Oil & Gas Co. Managing Director Ali Vakili said on April 26.

Khatam al-Anbiya Construction Headquarters, the engineering arm of the Revolutionary Guard Corps, is part of the domestic group, as is Oil Industries Engineering and Construction and Iran Marine Industrial Co., the report said. The group also includes Iran Shipbuilding and Offshore Industries Complex Co., Industrial Development and Renovation Organization of Iran, and National Iranian Drilling Co., it said.