Tapping Iran’s oil and gas vital for demand, Shell’s Chief Says.

Iran, which holds the world’s fourth largest proven reserves of crude oil and the second biggest deposits of natural gas, has been off limits for a decade to international oil companies since the imposition of tough international sanctions and strict investment policies imposed by the Islamic Republic.

“Longer term Iran’s oil and gas resources will have to be developed to meet demand,” Voser said during a question and answer session at the Oil & Money energy conference in London.

In 1999, Shell defied a U.S. sanctions threat to sign an estimated $ 800m (£492m) buy-back deal with Iran to develop two offshore oil fields in the Persian Gulf known as Soroosh and Nowrooz. The project was completed in 2005.

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Existing sanctions prevent international oil companies dealing with Tehran amid ongoing deadlock over the country’s nuclear program.However, a recent call between U.S. President Barack Obama and Iran’s Hassan Rouhani – the first such dialogue between the two nations for more than 30 years – has raised hopes that a diplomatic solution can be found that would see sanctions partially lifted.

Shell was reportedly blocked earlier this year from settling a $ 2.3bn debt with Iran through the supply of grains and drugs. Since an oil embargo was imposed in July, the European Union has extended economic sanctions against the Islamic Republic to include gas exports and shipbuilding equipment.

Voser’s comments on Iran came after he delivered a speech to industry experts, Middle East energy official and chief executives, urging more investment into producing oil and gas in order to avoid a new energy crunch for consumers.“Every two years we need to build a new Saudi Arabia” to meet global energy demand, he said.

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The remarks from one of Europe’s most influential energy executives come amid concern that a pullback in investment by some resource and energy companies following the global financial crisis could result in future shortfalls in supply if economic activity should pick up quicker than was previously expected.Oil prices peaked at $ 147 (£91) a barrel in 2008 amid concerns over the world hitting peak production and Iran shutting off supplies from the Persian Gulf.

Demand for energy is expected to double over the next 50 years spurred by rapid industrialization in China and across Asia. At the same time, world energy supply is struggling to keep up with prospective demand. The International Energy Agency (IEA) forecasts that crude oil output from wells producing in 2011 will have dropped by almost two-thirds by 2035.

But analysts have complained that earnings at Europe’s biggest oil companies such as Shell and Italy’s Eni have failed to keep pace with oil prices consistently above $ 100 a barrel.Citigroup warned in August that higher costs across the upstream production business and the capital intensity of major production projects have eroded profitability in the industry.

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