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C O N F I D E N T I A L THE HAGUE 000725 

SIPDIS 

STATE FOR EEB/ESC/IEC THAMMANG, EEB/ESC/TFS CBACKEMEYER 
STATE ALSO FOR NEA/IR RWADHWANI 

E.O. 12958: DECL: 12/02/2019 
TAGS: ENRG EPET ETTC PREL IR NL
SUBJECT: NETHERLANDS/IRAN SANCTIONS ACT: SHELL CONFIDENT 
ITS ACTIVITIES SHOULD NOT TRIGGER ISA 

REF: A. STATE 121808 
¶B. THE HAGUE 2 
¶C. BACKEMEYER-CANAVAN E-MAIL 11/27/2009 

Classified By: Head of Economic Unit Shawn Gray, reason 1.4 (b), (d) 

¶1. (C) SUMMARY: Royal Dutch Shell executives told EconOff 
December 2 the company's activities should not trigger action 
under the Iran Sanctions Act (ISA). The Department's review 
process has grabbed Shell's attention. With in-house counsel 
looking on, Shell executives described the status of the 
Soroosh and Nowruz oil development project and Persian LNG 
gas project. More broadly, Shell reiterated its view that 
sanctions targeting Iran's energy sector must also apply to 
Chinese and Russian firms in order to have any effect on the 
regime. END SUMMARY. 

¶2. (C) EconOff discussed the Department's ISA review per ref 
A with John Crocker, Shell's Head of International Government 
Relations, on December 2. Roelof van Ees, Government 
Relations Advisor seconded from the Dutch Foreign Ministry; 
Ayman Hamza, Middle East Regional Advisor; and Joseph Babits, 
in-house counsel, also attended. Separately, EconOff 
informed Foreign Ministry energy official Roeland Kollen 
about the ISA review as it relates to the Netherlands. 

--------------------------------------------- -- 
STATUS OF SHELL'S INVESTMENT ACTIVITIES IN IRAN 
--------------------------------------------- -- 

¶3. (C) Soroosh and Nowruz: Crocker confirmed Shell handed 
this project over to Iran several years ago and no longer has 
any personnel working on it. He said Shell's only remaining 
involvement in the project is cost recovery, which is 
approaching its end. Referring to the U.S. government's May 
1998 decision to waive sanctions for Total's investment in 
the South Pars gas field, Crocker said Shell proceeded with 
the Soroosh and Nowruz development with the unambiguous 
understanding that the same waiver applied to this project. 
He conceded that relying on a waiver agreement made in the 
1990s with a previous U.S. administration carried risks, but 
said Shell felt it was on strong legal ground to contest any 
attempt to apply ISA to Soroosh and Nowruz. 

¶4. (C) Persian LNG (PLNG): Crocker said Shell has received 
clear advice from external counsel that ISA does not apply 
to pre-final investment decision (FID) activities in Iran. 
He said PLNG's time horizon has slipped again, with 2011 as 
the latest possible FID date if political negotiations over 
bringing in a Chinese partner and technical assessment work 
proceeded without interruption. Crocker added PLNG's FID has 
consistently remained two years away since the parties signed 
Qconsistently remained two years away since the parties signed 
an initial agreement in 2004. 

--------------------------------------------- -------------- 
SHELL: IRAN SANCTIONS WITHOUT CHINA'S BUY-IN DOOMED TO FAIL 
--------------------------------------------- -------------- 

¶5. (C) Crocker reiterated Shell's long-standing position on 
Iran sanctions. The firm is not opposed to a broad set of 
sanctions imposed on all energy sector participants, 
including Chinese and Russian firms. But if only western 

energy companies adhere to them, Chinese firms will 
enthusiastically fill the void. (Note: As in prior meetings 
- see ref B - he said Iran's downstream oil and gas sector 
was crawling with Chinese. End note.) Crocker said recent 
conversations with U.S. officials have encouraged him that 
the USG increasingly shares this view. However, he was 
concerned by the one-month gap between Assistant Secretary 
Feltman's testimony before the House Foreign Affairs 
Committee and this last-minute outreach to affected 
companies. After November 9-10 meetings at the Department, 
Crocker had the impression that the ISA review was nothing 
to worry about. He asked whether the USG's strategy on ISA 
had changed in recent weeks and expressed Shell's strong 
interest in Congressional developments and the outcome of 
this review. 

LEVIN