Shell says still happy to invest in oil at $50 per barrel

ISTANBUL (Reuters) - Royal Dutch Shell (RDSa.L) Chief Executive Jeroen van der Veer said on Thursday investing in oil projects could still be attractive with the price of $50 a barrel if taxes and royalties on oil production are not too high.

Executives and officials of oil producing countries have previously said oil prices of about $80 a barrel were needed to justify investment in new projects.

Asked if the $50 a barrel would justify oil production, Veer told reporters in Istanbul: "Yes I can produce, provided I do not have too high taxation and royalties ... That is in the hands of the government."

Veer said the Anglo-Dutch oil giant was "very much interested" in Iraqi oil contracts, which he projected would be distributed in 2009 and Shell was in talks with a number of companies about a possible consortium.

"We will make the bidding sometime in 2009 when we expect the contract to be given. We are talking for a consortium with an oil company and then bid maybe some weeks before the bidding starts." he said.

"After the contracts, we will have additional opportunities there."

However, some analysts and oil executives said the government's hopes of having deals by the summer were overly ambitious.

Shell signed an initial multi-billion dollar agreement in October with Iraq to capture gas that otherwise would be burned off during production of oil.

Veer said their gas deal with Iraq depended on the safety of Shell workers there. "If staff safety is not guaranteed, we will withdraw our staff."

He said current financial distress will add more complexity to pipeline projects, already complicated by governments and the need for viable throughput.

"We do not invest in a pipeline project unless our hydrocarbon flows in it," he said in response to a question about whether Shell would take part in a Turco-Italian oil pipeline deal to pump its Kazakh and Caspian oil via the Black Sea and Turkey to the Mediterranean. "Let us study it now."

Shell said in October it would delay a decision on expanding its Canadian oil sands project as rising costs and falling crude prices raise questions about the profitability of the industry.

Veer said oil sand projects were "at the moment the most expensive" source of oil supply under the present level of oil prices.

(Written by Ercan Ersoy; Editing by Andrew Macdonald)