DAR AL HARB/ISLAM - U.S.A.: SHELL OIL UNDER PRESSURE

A response from Shell concerning the letters it had received from American investors:


Shell says work in Iran to continue despite pressure from US pension funds

LONDON (Thomson Financial) - Royal Dutch Shell PLC is not about to abandon Iran despite intense pressure from large US pension funds for the Anglo-Dutch energy group to drop a planned 5 bln usd gas project there.

California Public Employees' Retirement System, the New York State Common Retirement Funds and New York City Pension Funds, wrote to Shell and a number of other major energy companies to emphasise the risk of doing business in Iran amid the mounting tension between the gas-rich country and the US.

Jeroen van der Veer, Shell's chief executive, said preparatory work on the project continues and it will take about 12 months for the group to decide whether to proceed with the construction phase or not.

He assured the group will take into account the "complicated" political situation affecting Iran in its decision-making.

For the meantime, "our architects will continue to do their work" there, he told reporters in a conference call following the group's second quarter results.

In a two-page letter they sent to Van der Veer, the pension funds said they are worried the infrastructure developed by Shell could be targeted in any future war.

"Historically, regional conflict has exposed facilities and infrastructure to the risk of attack, as evidenced by the Iran-Iraq war of the 1980s," the Times newspaper quoted the letter as saying.

The pension funds also feared the growing tension between the US and Iran may lead to "tightening economic sanctions" and "will negatively impact companies doing business there".

The sent a similar letter to France's Total SA, Italy's Eni SpA, Spain's Repsol, Russia's Gazprom and India's Oil and Natural Gas Corp.


[and]


Shell says economics, not politics, delay Iran deal
By Tom Bergin

LONDON, July 26 (Reuters) - The chief executive of Royal Dutch Shell Plc (RDSa.L: Quote, Profile , Research) said rising industry costs and negotiation on deal terms had delayed a planned multi-billion dollar investment in Iran, rather than the threat of sanctions. "It is primarily project reasons ... are the reasons for delay," Jeroen van der Veer told a conference call with reporters.

Shell has been in talks for years about building Iran's first liquefied natural gas (LNG) project, which would be fed by the giant South Pars gas field.

Iran faces possible UN sanctions on investment because of its nuclear programme, which Washington says is a cover for the search for an atomic bomb. It has already been subjected to limited UN sanctions and U.S. sanctions.

Van der Veer said Shell would consider the political environment when it had agreed a viable technical plan -- made more difficult by the U.S. sanctions which preclude the use of products or services from U.S. oil service corporations.

Shell also needs to agree financial terms with Tehran. Iran has in the past offered foreign companies unappealing contracts.

"We have to realise that we better make sure we make the economics of such a project right," the CEO added.

The Financial Times newspaper reported on Thursday that U.S. shareholders had criticised Shell for its investment plans in Iran.

...



Pertinent Links:

1) Shell says work in Iran to continue despite pressure from US pension funds

2) Shell says economics, not politics, delay Iran deal