Iran General NewsRepsol, Shell near $4.3 bln Iran LNG deal-source

Repsol, Shell near $4.3 bln Iran LNG deal-source

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Reuters: Spain’s Repsol and Royal Dutch Shell expect to sign a preliminary deal with Iran in coming days for a $4.3 billion liquefied natural gas (LNG) plant and port terminal, a source close to the deal said on Tuesday. By Jason Webb

MADRID, Jan 23 (Reuters) – Spain’s Repsol and Royal Dutch Shell expect to sign a preliminary deal with Iran in coming days for a $4.3 billion liquefied natural gas (LNG) plant and port terminal, a source close to the deal said on Tuesday.

Repsol and Shell hope to clinch a final agreement on the facilities, which would serve part of Iran’s South Pars gas field, by late this year or early in 2008, said the source, asking not to be named.

“It’s not a done deal yet,” said the source, who could not give a breakdown of how much of the deal would be for Repsol and how much for Shell.

A deal would be a blow to Washington, which in addition to barring U.S. investment in Iran, has in the past year been increasing pressure on non-U.S. companies to refrain from investing in Iran amid Western accusations that Iran is seeking an atomic bomb.

Iran denies the charge but in December it was slapped with limited U.N. sanctions and it risks harsher ones if it does not co-operate with International Atomic Energy Agency investigators.

Washington’s tough line means it will be increasingly hard for oil companies to maintain operations in both the United States, where Shell and Repsol have fields, and Iran, analysts say.

However, Shell and Repsol may have a stronger incentive than some of their industry rivals to risk Washington’s ire because they both have weak records on adding new oil and gas reserves,

John Browne, Chief Executive of rival BP Plc has said he will not invest in Iran because he is concerned about compromising his company’s U.S. interests.

Shell declined to comment on the report that a deal was close.

No production figure was immediately available for the Iran project but exports could start in 2011 or 2012, the source said.

LNG is super-cooled natural gas that can be transported on tankers.

The liquefication plant would cost about $2.5 billion and the port terminal and other infrastructure about $1.8 billion, the source said.

(Additional reporting by Tom Bergin in London)

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