UK-Dutch energy major, Shell has given its staff in Iran until 31 October to finish work on the Persian LNG project as it scales back down its Tehran office.

Staff numbers will now be reduced to a minimum as a result of increased UN sanctions, a source close to the company in Iran tells MEED.

“They are not closing the office, but Shell’s staff will be reduced to a handful. If the sanctions are lifted, then they will come back”, says the Tehran based source.

Shell currently has no upstream or downstream operations in the country.

“We will comply with the new UN sanctions”, says a Shell spokesman.  Shell would not comment on the status of their Tehran office.

Shell signed an initial agreement with National Iranian Oil Company (NIOC), along with Spain’s Repsol in 2002 for the development of phases 13 and 14 of the South Pars field. The project would be integrated with the Persian LNG project, which aims to build two liquefied natural gas (LNG) trains producing around 16.2 million tonnes a year for export.

Shell and Repsol were each assigned 25 per cent interests with NIOC holding the remaining 50 per cent. After eight years of drawn out talks and no decision from the European oil majors, NIOC opted to remove the partners from the scheme at the end of May.

The two companies have held talks with China’s Sinopec about the take over of their role in the Persian LNG project, but so far they have not progressed. South Pars is one of the country’s biggest energy projects and the exit of international oil majors is a major setback to the country’s attempts to expand energy exports (MEED 16:6:10).

In June, sources in Tehran told MEED they believed the companies could reprise a downstream role, building a liquefaction plant, but since then their position in the country has become untenable.

On 10 June, the United Nations Security Council passed resolution 1929, voting in favour of a fresh round of sanctions on Iran in an attempt to force Tehran to comply with international demands to halt its uranium enrichment programme.

Some staff are likely to be relocated to neighbouring Iraq, with the development of the 12.6 billion barrel Majnoon field in the south of the country proceeding.