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Shell voices long-term concerns over Europe as profits double

By Emma Rowley

EUROPE’S failure to cultivate growth is a bigger worry for oil and gas major Royal Dutch Shell than the region’s current sovereign debt crisis.

The Anglo-Dutch company has cut its support of European projects to just 15pc of its total investment spend, which it puts at $100bn (£62bn) over four years. Shell expects to keep reducing that share amid longer-term concerns about the region, according to Simon Henry, its chief financial officer.

“Europe’s macroeconomic position can only recover, and the sovereign debt crisis can only be addressed, through underlying economic growth, and we do not see the European Union creating the conditions for that – in fact, quite the opposite,” he said. “Most moves made by the Commission, one way or the other, tend to almost, either directly or indirectly, reduce the competitiveness of European industry.”

The warning came as Shell, Europe’s largest oil company in terms of market value, reported profits had doubled in the third quarter of this year, boosted by the climbing oil price. Earnings were $7.2bn (£4.5bn), up 106pc on a year earlier, on a current cost of supplies (CCS) basis, an industry measure stripping out changes in inventory.

Shell’s overall oil and gas production fell 2pc to 3.01m barrels of oil equivalent a day, but was rising when the impact of its programme to sell off non-core assets was taken out. Several major new projects should come on stream in the next few years.

Liquefied natural gas (LNG) performed well, with sales up 12pc. Shell is working on plans to export LNG from Canada to Asia, where prices are much higher and the problems with nuclear plants following the Japanese earthquake have boosted demand for other energy sources.

BG Group this week announced an $8bn deal to buy LNG to export from the US, a landmark in the country’s shift to becoming an exporter of gas now that technology means it can access its vast shale reserves.

Shell also said that it hoped to be able to return to Libya to resume its exploration programme.

Analysts welcomed the results and said Shell had hit a “sweet spot”. Its “B” shares closed up 11p – O.47pc – at £23.30, as the wider FTSE 100 climbed 2.89pc.

Separately, US rival ExxonMobil said quarterly earnings rose 41pc to $10.3bn as the high oil price offset falling production.

Published in the Business Section of the Telegraph on Friday 28 October 2011

Shell, Cnooc Parent in Talks on Refinery Deal, China Daily Says

By Bloomberg News – Jan 11, 2011 3:21 AM GMT+0000

Royal Dutch Shell Plc is in discussions with China National Offshore Oil Corp. to participate in the second phase of the Huizhou refining project, the official China Daily reported.

A chemicals venture by Shell and China National Offshore is keen to join in the refining project in southern China, the newspaper reported, citing Zhu Mingcai, deputy chief executive officer of the venture. The second phase of the plant will require more than 50 billion yuan ($7.5 billion) of investment, China Daily said, citing unidentified company officials.

Li Lusha, Shell’s Beijing-based spokeswoman, declined to comment on the report. Liu Xiaobiao, the spokesman at China National Offshore, didn’t answer calls to his office and mobile telephones seeking comment.

The parent of Hong Kong-listed Cnooc Ltd. started operations at the refinery in Guangdong province in 2009. China National Offshore plans to almost double the plant’s capacity to 22 million metric tons a year, or 440,000 barrels a day, by 2013 in its second phase of development, according to President Fu Chengyu.

–Winnie Zhu and Baizhen Chua. Editors: Ryan Woo.

To contact the Bloomberg staff on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net; Baizhen Chua in Beijing at bchua14@bloomberg.net

To contact the editor responsible for this story: Jane Lee at jalee@bloomberg.net.

SOURCE

Shell Moves Sakhalin LNG Manager to Australia to Lead $20 Billion Project

Bloomberg

By James Paton – Aug 26, 2010 4:48 AM GMT+0100

Royal Dutch Shell Plc has brought the former manager of Sakhalin-2, Russia’s first liquefied natural gas project, to Australia to oversee development of a proposed venture that may cost more than $20 billion.

Shell, OAO Gazprom’s partner in the $22 billion Russian project, assigned Hilary Mercer to the Queensland venture, Ann Pickard, chairman of the company’s Australian unit, said in an interview. Shell and PetroChina Co. this week completed the purchase of Arrow Energy Ltd., gaining gas for an LNG venture that may produce 16 million metric tons of fuel a year.

Mercer led construction at Sakhalin-2 in Russia’s far east, a development Shell calls “one of the most challenging engineering feats ever achieved.” Shell, BG Group Plc and ConocoPhillips are among companies planning rival Queensland ventures that would be the first in the world to convert coal- seam gas into LNG for export.

“There are enormous complexities with LNG projects, and cost overruns are a frequent issue,” Evgeny Solovyov, an analyst at Societe Generale, said by phone from London. “Shell is one of the best in the world as far as complex integrated energy projects are concerned, and LNG in particular.”

Mercer’s title is vice president of LNG and integration, Melbourne-based Shell spokesman Phil Connole said in an e-mail yesterday.

Shell may spend $50 billion in Australia over the next decade as Europe’s largest oil company continues a shift to gas, Pickard said in an Aug. 19 interview. In Australia, Shell is a partner in the A$43 billion Gorgon LNG project led by Chevron Corp. and plans to become the first to develop floating LNG ventures.

‘Fortifying Australia’

Shell said it aims to make a decision whether to proceed with the Curtis Island LNG development in Queensland by 2012. Pickard called the venture a “$20 billion plus” project and said Mercer is one of Shell’s “top project developers.”

Shell, which expects gas to account for more than half of its total production by 2012, is “fortifying its Australian business,” Societe Generale’s Solovyov said. “Sakhalin is an important project, but they did what needed to be done there.”

Sakhalin-2 is “equivalent in size to five world-scale projects, located in a hostile sub-arctic environment and covers a vast area in a region with almost no existing infrastructure,” Shell says on its website.

Moscow-based Gazprom wrested majority control of Sakhalin-2 from Shell in 2007 after government pressure over rising costs and environmental lapses. Shell in 2005 said the second phase of the project would cost $20 billion, double an initial estimate.

Asian Markets

The LNG plant started last year and allowed Russia, holder of the world’s biggest gas reserves, to export fuel to the Asia- Pacific. Gazprom controls Sakhalin Energy, operator of the Russian plant, and Shell owns 27.5 percent of the project. Mitsui & Co. holds 12.5 percent and Mitsubishi Corp. 10 percent.

Shell’s Pickard succeeded Russell Caplan as chairman in Australia after taking over in March as executive vice president of exploration and production for the country. She previously spent five years with Shell in Nigeria.

Andrew Faulkner, who joined Shell in 1982, became chief executive of Arrow following the A$3.5 billion ($3.1 billion) takeover of the gas company.

Santos Ltd., BG and ConocoPhillips partner Origin Energy Ltd. also plan projects in Queensland that will convert gas extracted from coal seams. LNG is gas compressed to a liquid for transportation by ship to destinations not linked by pipeline.

Shell may partner with Adelaide-based oil and gas producer Santos in developing LNG in Queensland, analysts including Aiden Bradley of Goldman Sachs & Partners Australia, have said.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

SOURCE ARTICLE

BG in spotlight as Shell circles 356.9p

By Geoff Foster
20th August 2010

Spotlight: Oil giant BG Group has always been rumoured to be at the top of Royal Dutch Shell’s shopping list

It would certainly make dealers’ eyes water and be one of the biggest ever deals in UK corporate history: a £54billion, or £16 a share, cash bid by Royal Dutch Shell (49p down at 1740p) for BG Group, the oil and gas exploration division that used to be part of British Gas.

That was the rumour doing the rounds yesterday following an interesting interview down under.

Ann Pickard, Shell Australia’s executive vice president, revealed that Europe’s largest oil company plans to spend up to £32billion in Australia over the next ten years as it concentrates more on gas production.

Royal Dutch Shell has a war chest of up to £60billion for acquisitions and BG Group has always been rumoured to be at the top of its shopping list. Pickard’s comments immediately prompted speculative buying of BG’s shares, which touched 1059p before the general dull trend left them 6p easier at 1030p.

Shell apparently plans more than a dozen liquefied natural gas (LNG) projects in Australia, and by 2012 it forecasts that more than 50 per cent of its production will come from gas. Shell agreed in March to acquire Arrow Energy for £1.9billion, giving it reserves to feed an LNG venture in Queensland state.

But if Shell really wants to substantially up its game in Australia, then an offer for BG Group is considered to be a no-brainer. BG entered Australia in early February 2008 via an alliance with Queensland Gas Company to develop coal seam gas fields and construct and own an LNG plant. Its total reserves and resources are now 2.9billion barrels of oil equivalent.

DAILY MAIL ARTICLE

Shell Australia’s New Chief Ann Pickard to Lead ‘Major’ Spending on LNG

Shell said last month that a quick recovery in energy demand and prices was unlikely and that it would cut 5,000 jobs. Even so, Chadwick said “Australia is a growth area for us.” The headcount in Perth has more than quadrupled to about 260 people in the past four years, he said. “Operating Prelude will have implications we need to staff up for.” Shell employs about 2,500 people in Australia, according to its Web site.

Click to continue reading “Shell Australia’s New Chief Ann Pickard to Lead ‘Major’ Spending on LNG”

BG’s huge find propels Brazilian oil to centre stage

A vast new oilfield off the coast of Brazil could contain up to two billion barrels of crude, providing fresh evidence that a spate of discoveries in the region is opening up a new frontier for the global oil industry.

Click to continue reading “BG’s huge find propels Brazilian oil to centre stage”

Santos cements gas supply deal with Petronas

Analysts expect the consortiums to consolidate into two groupings and believe Santos/Petronas and BG are well positioned. Origin/Conoco has yet to secure a foundation customer, while the Shell/Arrow team have the smallest reserves.

Click to continue reading “Santos cements gas supply deal with Petronas”

Origin, Conoco May Spend A$35 Billion on LNG Project

BG, a venture between Santos and Malaysia’s Petroliam Nasional Bhd., and Royal Dutch Shell Plc are among those also proposing to build LNG plants on Curtis Island based on coal- seam gas, which hasn’t previously been used as a fuel for export LNG. Liquefied Natural Gas Ltd.

Click to continue reading “Origin, Conoco May Spend A$35 Billion on LNG Project”

Queensland May Export 20 Million Tons a Year of LNG, Bow Says

Royal Dutch Shell Plc, which said in February it is studying a site near Gladstone in the northeastern state for a potential LNG project, may produce 9 million tons a year from its plant, using three processing units, De Stefani said. It’s too early to comment on the capacity of Shell’s potential project, said Claire Wilkinson, a Perth-based spokeswoman for the company’s Australian unit.

Click to continue reading “Queensland May Export 20 Million Tons a Year of LNG, Bow Says”

BG chief becomes one of UK’s best-paid bosses with £11m deal

Chapman’s pay award easily eclipses Tony Hayward at BP and Royal Dutch Shell’s outgoing chief executive, Jeroen van der Veer, who have endured difficult years.

Click to continue reading “BG chief becomes one of UK’s best-paid bosses with £11m deal”