Reuters reported that oil company Royal Dutch Shell is seeking to work around international sanctions by repaying $1.4 billion oil debt to Iran with a grain barter deal via US agribusiness giant Cargill.
Industry sources said that Shell wants to repay a debt that is growing larger because of unpaid interest, having failed to settle its accounts with the National Iranian Oil Company ahead of a European Union embargo on oil imports that started on July 1. It is hoping to get clearance from US, UK and Dutch authorities who will be under pressure to agree on humanitarian grounds for an offset agreement that would permit it to fund Cargill to deliver enough grain to Tehran to clear the debt. An industry source said that Shell wants to repay what it owes NIOC. They want to maintain amicable relations for the day when sanctions will be lifted. An offset transaction is the only way forward. They are looking at several options. The main one is Cargill. In the run up to the July 1 EU oil embargo deadline Shell kept buying Iranian crude after its competitors had called a halt. In the summer it was denied permission by the UK government to pay Tehran direct via bank transfer. Sanctions bar European banks routing payments for oil back to Iran. This year’s banking, oil, insurance and shipping sanctions have tightened the screw on Iran’s finances, halving its oil exports and forcing a collapse in the value of the Iranian rial currency. Sanctions do not apply to the delivery of grains and other foodstuffs but, isolated from international banking, Iran has been forced to pay a premium for grain imports. Grain traders expect it to end up buying about 5 million metric tonnes on the open market in 2012, some of that supplied by Cargill. Grain worth $1.4 billion would be enough to meet about 80 percent of that annual import requirement, assuming a range of imports including wheat, corn and barley priced at about $300 a metric ton with shipping.