GULF TIMES

Sunday 5 September, 2010

Bloomberg/Amsterdam

Royal Dutch Shell, Europe’s largest oil company, is set to reverse its decline in production after projects in Qatar come on stream, Sanford C Bernstein & Co said.

“After a decade of declining production, Shell is finally entering a sweet spot for production growth,” Oswald Clint, a London-based analyst at Bernstein, said in a note to investors yesterday.

Shell also has “probably the best portfolio” of pre- final-investment-decision projects around, “and a strategy refocused on the exploration and production business, with plenty of interesting exploration options to add to reserves”.

The Anglo-Dutch company is targeting hard-to-reach rock formations in Australia, China and the US, as well as projects in Qatar, to boost production growth. As much as 40% of Shell’s capital spending in the next few years has been earmarked for the Asia-Pacific region.

This year has already seen start-ups in the Gulf of Mexico and Brazil with Perdido and the BC-10 project, while the Sakhalin project in Russia has beaten production goals.

Shell spent $19bn, triple the original estimate, to build the world’s largest gas-to-liquids plant in Qatar. Shell’s Pearl project will churn out 140,000 barrels a day of liquid fuel and 120,000 barrels equivalent of ethane gas and condensate, a by-product that’s like a light crude oil.

The company also has a 30% stake in Qatargas 4, part of the world’s largest LNG complex, due to start exports in 2011.

Peter Voser, in his second year as chief executive officer of Royal Dutch Shell, expects to double cumulative asset sales to as much as $8bn by the end of 2011, he said in July.

Cost savings of $3.5bn beat an earlier target by about 15% and were completed early, resulting in 7,000 job reductions 18 months ahead of schedule. Voser is assessing more than 35 projects that may add 8bn barrels of oil equivalent, boosting production until 2020.

Shell expects an 11% production increase in 2009 to 2012 with a forecast of 3.5mn barrels of oil equivalent a day in 2012. Shell, which has been adding more gas than oil to its resources since 2005, expects the share of gas as a proportion of total output to rise to 52% in 2012.

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