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

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.