DAR AL HARB/ISLAM - U.S.A./IRAN: U.S. PENSION FUNDS URGE SHELL OIL TO ABANDON IRAN

US pension funds urge Shell to abandon Iran
The call from influential American investors comes a day before the oil group is expected to report bumper profits
by Steve Hawkes

A political row threatens to overshadow tomorrow what promises to be one of the best sets of results from Shell for months after it emerged that a group of US pension funds have called on the group to scrap a £5 billion project in Iran.

Some of America’s most influential institutional investors have written to Shell and other seven international energy companies warning they are becoming increasingly exposed by guarding their ties with the pariah state.

The investors include New York City’s five main pension funds and the California Public Employee’s Retirement System.

A two-page letter sent to Jeroen van der Veer, Shell's chief executive, and his peers at Gazprom, France’s Total and five other energy companies referred to Iran as a “state sponsor of terrorism”.

The letter added: “It is increasingly likely that the the worsening situation and tightening economic sanctions will negatively impact companies doing business there.”

Shell and Spain’s Repsol hold a prelminary agreement with Iran to develop two phases of the country’s huge South Pars natural gas field.

Mr van der Veer has continually refused to clarify Shell’s intentions, stating only that a final decision is at least a year away.

American oil and gas companies are barred from investing in Iran and the former BP chief executive Lord Browne of Madingley voiced his opposition to investing in the country two years ago. He said: “Politically, Iran is not a flyer.”

The pension funds have asked for a response from Shell and its rivals by the end of August but did not make clear what reprisals they may take.

A Shell spokesman refused to comment about the move but insisted that the company had so far carried out only feasibility work on the South Pars development. He said: “We will make a final commercial decision in a year or so’s time. When we come to that decision we will take political considerations into account. We are following developments closely and clearly we will keep government and stakeholders informed every step of the way.”

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US funds criticise Shell for Iran activities
By Rebecca Bream

Royal Dutch Shell has been criticised by a group of US pension funds over its activities in Iran, home to the world’s second-largest gas reserves.

A group of the largest public pension funds in the US, including the California Public Employees’ Retirement System (Calpers), the New York State Common Retirement Funds and New York City Pension Funds, have written to Shell emphasising the risks of doing business in Iran.
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The funds have also written to several other energy companies with activities in Iran, including Total of France, Eni of Italy, Repsol of Spain, Gazprom of Russia and ONGC of India.

The letter, sent on Tuesday and seen by the Financial Times, says the funds are “deeply concerned” that the companies’ involvement in Iran poses “significant risks” to the companies, their reputations and their shareholders.

The funds say growing tension between the US and Iran could lead to “tightening economic sanctions” and “will negatively impact companies doing business there”. The letter asks the companies to outline “the policies and safeguards you have in place” to mitigate the risks of operating in Iran.

American oil and gas companies are barred from investing in Iran but other energy groups have been venturing into the country, attracted by the large gas reserves available.

In January Shell and Repsol signed a controversial agreement with the Iranian government to look into developing the huge South Pars gas field. Shell and Repsol would each own 25 per cent of the project, which would be worth billions of dollars, with the National Iranian Oil Company holding 50 per cent.

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Pertinent Links:

1) US pension funds urge Shell to abandon Iran

2) US funds criticise Shell for Iran activities