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Reuters: UPDATE 1-Shell sees medium term capex steady at $22-23 bln

Thu Oct 25, 2007 3:07 PM BST
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LONDON, Oct 25 (Reuters) – Royal Dutch Shell Plc (RDSa.L: Quote, Profile , Research) expects to hold net capital expenditure steady at around $22 billion to $23 billion per annum, excluding acquisitions, in coming years, despite investor fears rising industry costs would boost the figure.

“You can foresee that we are spending around those levels in the medium term,” Peter Voser told a conference call with reporters on Thursday.

Citigroup said last week that Shell may yet again disappoint investors with an increase in near-term capital expenditure plans to $24-$25 billion a year from the $22-23 billion which the company forecast for 2007.

Analysts at Goldman Sachs predicted Shell’s 2008 capex could rise to $27.5-28 billion.

Voser repeated Shell’s guidance on the net capex figure of $22-23 billion, and the gross capex guidance of $24-25 billion, for 2007. Disposals account for the difference between the two figures.

Investors had feared that a higher figure would limit the cash available for dividends or share buybacks.

Voser said the precise level of capex would be affected by the timing of investment decisions and also noted that inflation in the sector was still running at around 10 percent, adding another $1 to the cost of extracting every barrel each year.

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