A political row threatens to overshadow tomorrow what promises to be one of the best sets of results from Shell for months after it emerged that a group of US pension funds have called on the group to scrap a £5 billion project in Iran.

Some of America’s most influential institutional investors have written to Shell and other seven international energy companies warning they are becoming increasingly exposed by guarding their ties with the pariah state.

The investors include New York City’s five main pension funds and the California Public Employee’s Retirement System.

A two-page letter sent to Jeroen van der Veer, Shell's chief executive, and his peers at Gazprom, France’s Total and five other energy companies referred to Iran as a “state sponsor of terrorism”.

BACKGROUND

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• US pension funds ask Shell to ditch Iran

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The letter added: “It is increasingly likely that the the worsening situation and tightening economic sanctions will negatively impact companies doing business there.”

Shell and Spain’s Repsol hold a prelminary agreement with Iran to develop two phases of the country’s huge South Pars natural gas field.

Mr van der Veer has continually refused to clarify Shell’s intentions, stating only that a final decision is at least a year away.

American oil and gas companies are barred from investing in Iran and the former BP chief executive Lord Browne of Madingley voiced his opposition to investing in the country two years ago. He said: “Politically, Iran is not a flyer.”

The pension funds have asked for a response from Shell and its rivals by the end of August but did not make clear what reprisals they may take.

A Shell spokesman refused to comment about the move but insisted that the company had so far carried out only feasibility work on the South Pars development. He said: “We will make a final commercial decision in a year or so’s time. When we come to that decision we will take political considerations into account. We are following developments closely and clearly we will keep government and stakeholders informed every step of the way.”

Shell is due to unveil quarterly profits of $6.7 billion (£3.3 billion) tommorow as it cashes in on near record oil and gas prices.

It would mark Shell’s best performance since the third quarter of 2006. The group reported a record $7.1 billion profit in the third quarter of 2005.

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