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Money.CNN.com: Shell sees oil at $30-$40

Company says it will stick to its longtime price assumption, plans on expanding refinery capacity.

September 20 2006: 4:41 PM EDT

AUSTIN (Reuters) — Shell Oil Co. is maintaining its oil price assumption for evaluating projects at between $30 to $40 a barrel, despite the recent slide in oil prices, the company’s president told Reuters on Wednesday.

“We’ve been maintaining the price assumption between $30 to $40 a barrel for some years and we intend to continue that,” John Hofmeister, who heads the U.S. unit of Royal Dutch Shell (Charts), said.

Most oil companies, including ExxonMobil (Charts) and BP (Charts), have based their budgets on oil prices near $30 a barrel for the last several years, using the logic that commodities are a cyclical market and given the long time horizon required for investments in oil infrastructure to reach fruition.

Separately, Hofmeister said the board of Motiva – a joint venture between Shell and Saudi Refining – would meet in the next few months to approve a project that would more than double capacity at its Port Arthur, Texas, refinery.

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