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THE WALL STREET JOURNAL: Shell CEO Says Oil Industry Will Remain Involved in Iran

Shell CEO Says Oil Industry
Will Remain Involved in Iran

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP

OHA, Qatar — Though Iran's nuclear dispute with the West is growing more heated, the oil industry can expect to stay involved in the Islamic nation for decades, Royal Dutch Shell Plc chief executive Jeroen van der Veer said Saturday.

“One has to realize that with Iran when you look at both the oil and gas reserves that they have a very strong position as a country,” Mr. van der Veer said. Speaking to reporters on the sidelines of the 10th International Energy Forum here, the Shell executive said: “In the complete order of magnitude,” looking at Iran and the nuclear energy challenge “you see only the short-term politics.”

He said oil prices were being influenced now by concerns about Iran but ultimately would respond to fundamental factors, such as the swelling crude inventories across consuming nations.

“You see a lot of emotion and I understand that,” Mr. van der Veer said, referring to the price of oil. “You have to pay a lot. But in the end, one has to look at fundamentals. The fundamentals are the stock position, how people will react to demand and at the moment there is no demand unmet in the world.”

Mr. van der Veer's remarks came even as a bit of tension emerged at the summit in Doha. Bill Ramsay, deputy executive director at the International Energy Agency, said remarks by Iran's firebrand President Mahmoud Ahmadinejad were “making it a lot more difficult for investors' to move into the country's energy sector because they “put people's teeth on edge.”

Earlier, Executive Director Claude Mandil had said the agency could, in theory, coordinate a release of its members' oil stocks to offset any shutdown in Iran's oil exports for up to four years. “We're all together holding four billion barrels of stocks,” he said. “Iran's exports are 2.7 million barrels a day. This would be enough to compensate for four years of production.”

Iran's OPEC governor Hossein Kazempour Ardebili responded Saturday by saying that comments by the two were counterproductive to improving much sought-after global energy security. “It's unprofessional for the IEA to talk on politics,” Mr. Kazempour said in an interview with Dow Jones Newswires. “Any sort of reference that one can survive without this or that isn't constructive and is counterproductive to energy security.”

Mr. van der Veer said there was enough “(refining) capacity in the world” and that currently oil prices have a lot to do with psychology. Oil futures on the New York Mercantile Exchange breached $75 a dollar for the first time Friday, closing at $75.17, the fourth record close in a week. It's the highest nominal close ever for the commodity and the highest close in inflation-adjusted terms since November 1981. The all-time record in inflation-adjusted dollars is $97.55, set in April 1980.

Meanwhile, IEA Chief Economist Fatih Birol said that some $300 billion per year in “upstream” investments is needed over the next decade globally to offset decreases in oil and natural gas production from aging fields and to meet future global energy demand.

Mr. Birol said the Organization of Petroleum Exporting Countries and Western oil companies were making big investments in future oil and gas production and in new refining capacity but said this had really only started in the past year or so. “We need at least six million barrels per day in net (oil) production capacity in the next decade to meet demand,” Mr. Birol said.

Scores of energy ministers and other officials from energy producers and consumers are attending the 10th International Energy Forum in Doha, to discuss oil security and improvements to data transparency.

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