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Royal Dutch Shell bets on LNG, on an epic scale

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By John Donovan

The comments below are from a Motley Fool article that draws attention to the fact that Shell’s Prelude FLNG project represents a bet “on an epic scale.”  The author is right. The project is an uninsured, uninsurable risk, which like Shell’s Alaskan ambitions, could potentially destroy Shell. 

As to the likelihood of the project being “on schedule and on budget,” we know Shell’s atrocious “misfires” track record on that score e.g. the Corrib Gas project in Ireland: 13 years behind schedule and four times over budget. And “Cash All Gone” (Kashagan), another white elephant.

Perhaps if Shell has managed to obtain any contingency risk insurance for Prelude, it will kindly let me know.

Extract from an article by Adam Galas published 18 April 2014 by The Motley Fool under the headline: “Why Dividend Growth Investors Should Avoid Royal Dutch Shell and Total”

Royal Dutch Shell is attempting to forge a comeback after several years of misfires. An example of this was the $5 billion spent at Beaufort, Alaska. After eight years (with no oil production), the company abandoned the project. Now a new CEO, Ben van Beurden, is at the helm and determined to steer a better course. 

The company is planning on selling $15 billion in assets between 2014-2015 and focusing on LNG exports and offshore drilling. This includes the construction of the largest ship in history, the Prelude, to act as a floating LNG liquefaction and tanker loading terminal. The estimated cost is 20% lower than land-based LNG export facilities, assuming the project can be accomplished on schedule and on budget.

FULL ARTICLE

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