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Financial Times: US funds criticise Shell for Iran activities

By Rebecca Bream
Published: July 25 2007 22:54 | Last updated: July 25 2007 22:54

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.

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.

Shell, whose chief executive, Jeroen van der Veer, will Thursday unveil second-quarter results, said it had not decided whether to proceed with the South Pars project. “Any decision is at least a year or so away,” said Shell. “When we come to deciding, we will take political considerations into account.”

Copyright The Financial Times Limited 2007

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