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Daily Mail (London): Royal Dutch Shell: IRAN THREAT

Alex Brummer, Daily Mail – London: KRTBN

With the assistance of a firm oil price Shell has restored itself to second place in the rankings of global oil with a handsome profits haul of GBP13bn for the last year.

But it has bigger geopolitical difficulties on the horizon as it seeks to restore its reserves.

The easy bit over the last year was winning the approval of the authorities to include in its replacement reserves the Pearl project in Qatar to convert natural gas to road fuel.

It has had to acknowledge that, as a result of its difficulty with Russia, reserves there will be far less than formerly projected.

Shell is also struggling with Nigeria where rebel military incursions are causing problems for production and drilling.

This is nothing compared to the potential problems in Iran. Chairman Jeroen van der Veer has acknowledged that there is a difficulty about pouring billions of dollars into Iran, at a time when the UN is tightening the sanctions screw.

Shell has been among the European investors in Iran spending GBP512m ($1bn) on the offshore Soroush/Nowrooz field. It is has now signed a preliminary deal to become involved in a GBP5bn ($10bn) project in the giant South Pars gas field.

BP, with its huge American interests, has steered clear of Iran in recent times, but Shell has been less reticent. Yet it might be better to show some caution. In most risk scenarios the possibility of a new conflict in the Middle East, with Israel and the US taking direct action to halt nuclear development in the Islamic state, look high.

Shell does not want to find itself on the wrong side of the US authorities as they move against Tehran.

2 February 2007

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