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30

Shell's Preparing to $10bn Iran Gas Project

Royal Dutch Shell is to continue preparatory work on a $10 billion natural gas project

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.