C O N F I D E N T I A L SECTION 01 OF 02 THE HAGUE 000246
SIPDIS
SIPDIS
STATE FOR EUR/UBI (RREITER), EB/ESC (JEIGHMIE)
E.O. 12958: DECL: 02/08/2017
TAGS: ETTC EPET ENRG PREL CH IR SP NL
SUBJECT: ILSA: DUTCH, SHELL ON SOUTH PARS GAS DEAL WITH IRAN
REF: A. STATE 12713
¶B. ENSTROM/HEUNG-EIGHMIE/REITER EMAILS
¶C. 06 THE HAGUE 2654
Classified By: AMBASSADOR ROLAND ARNALL,
REASONS 1.4 (B) AND (D)
¶1. (U) This is an action request; please see para 10.
¶2. (C) SUMMARY. Shell CEO van der Veer confirmed to the
Ambassador on February 7 that no deal was expected on the
South Pars LNG project until 2008 at the earliest. Van der
Veer said his recent public comments on political concerns
related to the project were not well received in Teheran.
Meanwhile, GONL officials reiterated support for targeted
sanctions against Iran but remained non-committal about any
action against Shell or any public comments on investment
projects in Iran at this juncture. Post requests further
information on possible U.S. pension legislation related to
investments in Iran's energy sector. END SUMMARY.
SHELL PUBLICLY NOTES POLITICAL CONCERNS
-----------------------------------------
¶3. (C) On February 7, the Ambassador raised ref A points
regarding USG concerns over the proposed Royal Dutch Shell
and Repsol of Spain LNG project in Iran with Shell CEO Jeroen
van der Veer. The Ambassador raised similar points with van
der Veer on January 19, immediately following press
announcements about the planned investment project. The
Ambassador noted concerns in Congress about investment
activities in Iran, including Congressman Tom Lantos' recent
statement during hearings on Next Steps in the Iran Crisis.
He said the USG valued the close and frank communication
that existed between Shell and Washington agencies on this
issue. He said the USG had also noted van der Veer's
February 1 public comments to Reuters on political concerns
related to the project (ref B).
¶4. (C) Van der Veer said his public comments had not been
well received in Teheran. He confirmed that no final
decision was expected on the South Pars LNG project until
¶2008. Moreover, he fully expected the Iranians to initiate
last-minute changes in the final terms of the agreement,
which would result in further delaying any final decision.
¶5. (C) Van der Veer said Shell understood USG concerns,
adding that Shell's primary motive in the South Pars project
was a need to keep China out. The Ambassador countered that
Shell's more sophisticated and advanced technology was
clearly more attractive to Iran. Van der Veer assured the
Ambassador that Shell would continue to follow a go-slow
approach with the project and keep the USG briefed on any new
developments.
GONL NON-COMMITTAL ON PUBLIC COMMENT
------------------------------------
¶6. (C) On February 5, EconCouns discussed ref A points with
Koen van der Wolk, Head of the Emerging Markets Division,
Directorate General for Foreign Economic Relations, Dutch
Ministry of Economic Affairs (MEA). She held a separate
meeting the same day with Foreign Affairs Ministry (MFA)
officials Gert Heijkoop, Deputy Director of the Middle East
Division in the Middle East Department, Loek ten Hagen,
Senior Policy Officer for Gulf State Affairs, and Femke
Hoogeveen, Senior Policy Advisor in the Energy, Economic and
Environmental Affairs Department. Roderick Wols, Deputy
Chief of Mission to the Dutch Embassy in Teheran, also sat in
on the meeting. EconCouns shared copies of van der Veer's
public comment and Lantos' statement with these officials.
¶7. (C) Both MEA and MFA officials confirmed that Shell
briefed them on a regular basis about the South Pars project.
Heijkoop reiterated GONL support for the implementation of
UNSCR 1737, including targeted sanctions against the assets
and travel of individuals associated with Iran's nuclear
program. However, both MEA and MFA officials said the GONL
THE HAGUE 00000246 002 OF 002
was not prepared to take any steps at this juncture that
would limit Shell activities in the region.
¶8. (C) Heijkoop noted that the GONL shared USG concerns
and said he would consult further about the possibility of a
GONL public comment or signal about concerns of moving
forward with major new investment projects in Iran. Van der
Wolk questioned whether a GONL public comment would be
constructive at this point, stressing that Shell was clearly
taking a go-slow approach on this and related projects such
as in Yadavaran (see ref C). He also asked for further
information on possible legislation that would encourage
pension funds to divest any shares held in companies that
invest in Iran's energy sector.
COMMENT: IT'S A BALANCING ACT
------------------------------
¶9. (C) Van der Veer's willingness to acknowledge publicly
concerns over the South Pars project strongly suggests that
the company realizes the need to balance its long-term
commercial interests against continuing good relations with
the USG. The GONL, meanwhile, appears reluctant to weigh in
publicly at this point but remains fully engaged in the
issue. Post will continue to consult with Shell and GONL
contacts on this issue.
ACTION REQUESTED:
-----------------
¶10. (C) In response to the MEA request (para 8), Post
would appreciate any additional information that Washington
can provide on possible legislation mentioned in ref A that
would encourage pension funds to divest in shares held in
companies that invest in Iran's energy sector.
ARNALL
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