...from Sir Philip Watts, Chairman of the Committee of Managing Directors of the Royal Dutch/Shell Group of Companies

I am delighted to have the opportunity, through 'Shell in the Middle East' magazine, to demonstrate Shell's continuing commitment to the Middle East, which is a very significant region for our business.

These are uncertain times. The events that have taken place over the last two years in the Middle East and neighbouring region and, indeed, in the world at large, have been disturbing for everyone. This has created a feeling of insecurity, which has adversely affected many people living and working in and around the region.

The security situation has been a major concern for all of us. Security measures for Shell staff and the Group's operations are, of course, reviewed and upgraded as required. Specific attacks against Shell, such as the bombing of 19 retail outlets in Pakistan in which there were, thankfully, no serious injuries, are of great concern to us. We very much hope that this will remain an isolated incident.

The recent bombings in expatriate neighbourhoods in Riyadh, with the loss of so many lives - and in which Shell staff and their families were caught up although, thankfully, without serious injury - were a very sad development.

Elsewhere in the region there are major issues to be resolved. Along with all stakeholders in the Middle East, we hope that the peace talks between Palestinians and Israelis continue until a satisfactory conclusion is reached. In Iraq, we hope that the end of hostilities will allow the people of that country to return to a normal way of life as soon as possible.

However, for the benefit of all stakeholders in the Middle East, business has to go on and the Royal Dutch/Shell Group of Companies is as committed to the region today as it has been for the past 100 years, during which time Shell has worked to develop and grow its businesses with its partners in the area.

The Middle East overall remains strategically important for Shell in terms of its investment plans. The Group is currently in negotiations for the development of a number of major projects in several countries totalling billions of dollars and our commitment to the governments and people of the region remains unswerving.

Gas is fast becoming the fuel of the 21st century and Shell is pleased to be playing a major part in bringing this clean and environmentally friendly fuel to consumers all over the world. Shell is the world's largest private gas company and is involved in all aspects of the value chain from exploration and production through to distribution and retail sales and to conversion into liquid forms such as LNG and Gas-to-Liquids.

We are very active in the gas arena throughout the region. In Oman, Shell has invested heavily in the upstream exploration and production of oil and gas through PDO [Petroleum Development Oman], a company in which Shell has a 34 per cent shareholding, and GISCO [Gas Investments Services Company, 85 per cent Shell]. In addition, we have invested in the downstream gas sector, through our involvement in OLNG [Oman Liquefied Natural Gas], a company in which Shell has a 30 per cent shareholding. We are also working hard to help commercialise the third production train at the neighbouring Qalhat LNG plant which is being developed by the Government of Oman.

In Egypt, Shell is the number one domestic gas producer and is pioneering the use of CNG [Compressed Natural Gas] in the region, with the opening last month of the first dedicated CNG retail outlet in Cairo. Egypt has also seen another first for Shell with the development of our first natural gas distribution network in the region to deliver gas to both commercial and residential customers.

Shell's partnership with the Saudi Arabian Government and its people extends over more than five decades and currently includes five major joint ventures, making Shell one of the largest foreign investors in the Kingdom. Beyond our partnerships with SABIC [Saudi Basic Industries Corporation] at Sadaf [Saudi Petrochemical Company], one of the world's largest ethylene plants, and the Saudi Aramco Shell Refinery Company [Sasref] in Al Jubail, one of the largest refineries in the world, Shell has two highly successful lubricants joint ventures that help us maintain our market leadership in automotive lubricants, and the Peninsular Aviation Services Company which provides aviation fuels.

In addition to these local investments, Shell is one of the largest lifters of Saudi crude. Shell and Motiva, a joint venture between Saudi Aramco and Shell, lift a total of about one million barrels per day. Our aspiration is to remain a trusted and valued partner, indeed the partner of choice. We believe our experience and appetite to continue extending that experience into new areas of business gives us much to offer to the Kingdom.

Shell is in discussions with the governments of several other countries in the Middle East for the development of major projects, and these discussions are a further demonstration of our long-term commitment to the region.

These talks include Qatar, where a US $4-5 billion integrated Gas-to-Liquids proposal is being discussed with Qatar Petroleum. In the UAE, Shell has a strong upstream focus in Abu Dhabi and continues to grow its regional marketing business from Dubai. Our aspiration is to grow our business in the upstream sector in Abu Dhabi whereby we can transfer our technology and operational strengths to the benefit of our long-term partners.

In Kuwait, the Government is moving forward with the Kuwait Project in its historic opening to the involvement of International Oil Companies in the upstream and Shell hopes to be successful in building its business there. Our experience with the Nowrooz/Soroosh offshore project has given us good insights into areas of future possible co-operation in Iran.

We are watching developments in Iraq with interest. Shell has a very long history of working in Iraq, going back to the 1920s, and we would be very happy to be a part of the development of the country's oil and gas infrastructure. However, Shell will only participate in upstream developments in Iraq when there are awards by the legitimate authority in place, in the interest of the Iraqi people. We also believe that any process by which foreign energy companies become involved in the energy sector in Iraq should be fair, transparent and on a level playing field.

Another development in Shell's policy of investment in the region is the opening of a new office in Dubai for the management of Shell's Middle East Exploration and Production Business. This will be followed by the opening of an office in the region by our Gas and Power Business. I am very pleased to see this positioning of senior executives of the Group much closer to National Oil Companies and other key stakeholders in the region. I believe this will further reinforce the Group's long-term commitment to the Middle East and open up new opportunities.

The use of gas is also very much in line with Shell's commitment to Sustainable Development. Apart from sustaining good business, we are also looking for ways to contribute to the well-being of the communities which grant Shell its licence to operate. We are constantly increasing our commitment to social performance and investment and to the development of local people and the communities in which we work. In April 2004, Shell is sponsoring a conference in Dubai on Sustainable Development in the Energy Sector of the Middle East to increase awareness of the issue and its importance for future generations.

As a part of our commitment to developing local human resources, the Royal Dutch/Shell Group has been running programmes to assist young people to set up and run their own businesses. The programmes are based on the LiveWIRE scheme started in the UK 21 years ago and now in operation in 21 countries around the world. In the Middle East, the programme, called Intilaaqah, has been working successfully in Oman since 1996. Using the same name, the programme was launched in Abu Dhabi earlier this year and will be launched in Egypt later this year. In Iran, the programme was launched last year using the name Andisheh-Va-Etebar.

Shell has also introduced a Diversity and Inclusiveness standard whereby the Group, as a global employer, seeks to recruit the best and brightest talent, regardless of race, creed, colour or gender. We do recognise the fact that, as an employer, Shell has a need to attract more women into its businesses, specifically in the Middle East, and we are working hard to achieve this.

We also provide practical support for this aim. Shell has been an active supporter of women's conferences throughout the region and this year in the UAE, for the first time, Shell sponsored the Emirates Businesswomen Award to recognise outstanding women in business and to encourage other women to take up jobs in the business world. In addition we have long-standing relationships with organisations such as the Arab International Women's Forum which links business and professional women in the 22 Arab countries with others from all over the world.

Our aim is not just to increase the number of women entering employment with Shell but to help them fulfil their full potential to occupy senior managerial positions within the Group.

Shell is acutely aware of its responsibilities to all of the countries in which it operates and is committed to maximising the employment, wealth creation and technology transfer benefits of all its projects. Shell is also a major oil trading partner with many countries in the region and Shell chemicals, lubricants, aviation and marine fuels are widely available across the Middle East.

The discovery of some 60 per cent of the world's oil reserves in the Middle East has been of enormous benefit to the region and to the world. The economies and wealth of these countries have grown at a very fast pace, enabling the development of modern infrastructures and world-class industries, encouraging both growth and diversity. Shell is very proud to have been able to play a part in this development and we hope to be able to continue to do so for many more years to come.