Royal Dutch Shell PLC (RDSA) is struggling to settle the over $1 billion it owes Iran for oil purchases after options such as financing a gas pipeline or paying for food shipments were rejected, people familiar with the matter said over the weekend.
"There have been several options examined. None has been successful," one person said.
Anglo-Dutch oil giant Shell's $1 billion plus debt to Iran is due to a European Union embargo that started July 1, which prevents the transfer of payments to the Islamic Republic.
Shell's failure so far to find a way to repay the debt isn't only bad news for Iran, which is facing a steep economic crisis amid mounting sanctions over its contested nuclear program but also for the Anglo-Dutch major. It needs to find a solution if it wants to return to the oil-rich Middle-Eastern nation once the standoff with the West is over.
In a recent attempt, Shell contacted U.S. commodities trader Cargill Inc. to pay for its deliveries of cereals to Iran in order to settle the debt, the people familiar with the matter said.
"But Cargill declined. It has its own financial channels to get paid and doesn't need Shell," one person said.
Shell hasn't ruled out the option of food bartering to pay its debts, sources familiar with the matter said.
Earlier, Iran had asked Shell to repay the debt by financing a natural gas pipeline, the people said. The idea was to fund part of a route receiving Iranian natural gas but in a neighboring country, such as Turkey or Iraq in order to bypass sanctions, they said. But Shell refused that proposal, they added.
Shell declined to comment. But a person familiar with the company said it "complies with all applicable sanctions."
Officials at Iran's oil ministry and the National Iranian Oil Co. declined to comment.
The National Iranian Gas Export Co.--which manages its sales of natural gas abroad--, Cargill and the European Union didn't return requests for comment.
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