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Shell’s Chief Reaffirms Goal of 30% More Output by 2015

THE NEW YORK TIMES: Shell’s Chief Reaffirms Goal of 30% More Output by 2015

Thursday 23 June 2005


Published: June 23, 2005

LONDON, June 22 – Jeroen van der Veer, chief of the Royal Dutch/Shell Group, said Wednesday that the company would spend more on research, focus on big technology-driven projects and possibly acquire other oil producers and reserves to increase production by 30 percent as planned by 2015.

Mr. van der Veer, who took the helm 15 months ago after Shell was forced to admit it had overstated its oil and gas reserves, said earlier this year that the company planned to produce 5 million barrels of oil a day in a decade, up from about 3.5 million to 3.8 million now. This week, he presented his top managers with more details of that 10-year plan, and on Wednesday, he briefed journalists about it at Shell’s London headquarters.

Most of the shift in strategy focuses on making the company an indispensable partner to countries rich in oil and natural gas. Several of the world’s top energy companies are quietly following this plan, as oil in geographically accessible areas dries up and exploration shifts to remote locales, or to countries where governments are reluctant to cede control of their resources to Western oil companies.

Crucial changes at Shell include increasing the company’s participation in what Mr. van der Veer calls elephant projects, or projects requiring several billion dollars in investment. To date, Shell is involved in three such projects with government and industry partners: at Sakhalin island, in Russia; Bonga, off the coast of Nigeria; and in Nanhai, China. By 2015, the company plans to be involved in 10 such projects, he said.

In a related move, Shell is starting an internal program to generate more creative proposals to encourage joint ventures with government-owned oil companies and countries with big reserve bases. The company also plans to increase its research and technology budget, currently $553 million a year, by an unspecified amount.

“Shell is spelling out what a lot of oil companies are already doing,” said Lucas Herrmann, a Deutsche Bank analyst in London. “If it helps them gain access, when access is an issue, I think it’s a positive move.” Shell has generally had good technology, Mr. Herrmann said, and “can use its expertise and ability to arbitrage markets to appear the more attractive partner.”

Mr. van der Veer also underscored that Shell would have the means to make acquisitions in the future. Shell is in the process of melding the Shell Transport and Trading Company and the Royal Dutch Petroleum Company, the two publicly traded companies that make up the Royal Dutch/Shell Group.

If the combination is approved by shareholders next week, as expected, Shell will be able to issue equity or debt when it wants, Mr. van der Veer said, providing financing for an acquisition. “The board has a duty not to have a disadvantaged relationship to other companies,” Mr. van der Veer said.

He said that Shell was not looking at any specific acquisition target at the moment and added that consolidation historically occurred when oil prices fell.

Along with its growth efforts, Shell will be paring in some areas, Mr. van der Veer said. The company will be involved in about 100 countries by 2015, down from about 140 now. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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