The New York Times: Exec: Oil Prices Linked to Capacity Boost
Higher oil prices and increased profits will give oil companies the incentive and leverage to make billions of dollars in new investments to expand refining and production, Royal Dutch Shell’s chief executive said Thursday.”
Filed at 11:15 a.m. ET
JOHANNESBURG, South Africa (AP) — Higher oil prices and increased profits will give oil companies the incentive and leverage to make billions of dollars in new investments to expand refining and production, Royal Dutch Shell’s chief executive said Thursday.
Global demand for oil had risen faster than anticipated leading to a shortage of refining capacity, Jeroen van der Veer said. But he said refining margins are now extremely profitable after years in the doldrums.
”If you see an increase in margins, the industry will react, said van der Veer, who added that Shell was considering increasing its own refining capacity.
Piero Overmars of the ABN AMRO investment bank told the 18th World Petroleum Congress that oil prices are expected to remain relatively flat for the next 10 years, with oil not expected to dip below $53 a barrel.
He said global energy demands will increase by more than 60 percent by 2030, forcing major structural changes in the petroleum industry that will mean trillions of dollars in new investments.
Van der Veer said new projects were hugely expensive, costing billions of dollars.
The key to sustainability of oil supplies, he said, would be new technology and project management.
”Stability of investment contracts for me is as important as the oil price,” said van der Veer.
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