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Shell’s outlook for oil production and prices: why $70 per barrel matters

ft.com/energysource

June 12, 2009 4:38pm

Malcolm Brinded, one of the top executives at Royal Dutch Shell who is hanging on to his job in the shake-up ordered by new chief executive Peter Voser, gave an interesting presentation last week setting out the company’s view of the outlook 2020.

His message: Shell can grow its production out to 2020, but the oil price will need to stay above $70 to make all of its potential investments profitable.

His speech, to a Credit Suisse conference in London, was a corrective to some of the gloomier stories about the production outlook that came out following the company’s annual strategy update in March.

Shell expects costs to come down, he said. From the summary:

Mr Brinded pointed out that he saw some inflationary costs pressures easing in the beginning of 2009 and that Shell is taking the opportunity to get better pricing from service providers and better levels of service. He also referred to the new organisation announced by Shell with a simpler organisation structure with more focussed accountability, creating a better platform for strategic delivery and lower costs

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