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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