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Shell says ‘no’ to U.S. pressure over Iran

Dec 9, 2008

Royal Dutch Shell is to continue preparatory work on a $10 billion natural gas project in Iran, despite calls from leading U.S. pension funds to withdraw, SHARECAST reported from London on Thursday.

The pension funds pressuring Royal Dutch Shell and other multinational energy companies to cease operations in Iran include New York’s five main pension funds and the California Public Employees Retirement System, which has $700m invested in Shell, according to reports.

The funds are themselves under pressure from state legislators in the U.S. to sell off their holdings in companies that have ties to Iran. The company’s chief executive, Jeroen van der Veer, said in a conference call to reporters that when the time comes to make a decision on whether to proceed, the political situation in Iran would be factored in to the decision making process.

Royal Dutch Shell said it would take one year to decide whether or not to proceed with the construction phase. The chief executive maintained that 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,” Reuters news agency reported. Shell has been in talks for years about building Iran’s first liquefied natural gas project, which would be fed by the giant South Pars gas field. 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 realize that we better make sure we make the economics of such a project right,” the CEO added. LNG is gas cooled to liquid so it can be transported economically in ships over long distances.

The U.S. government also says a handful of Chinese companies have ramped up shipments of military technologies to Iran, part of a surge in China-Iran trade that is complicating efforts to apply pressure on Tehran to rein in its nuclear program, writes The Wall Street Journal. The State Department and its embassy in Beijing have lodged “numerous” formal protests with the Chinese government since the start of the year over the shipments, U.S. officials said.



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