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The Wall Street Journal: Shell to Focus on Asian Nations

October 30, 2007; Page A10

BEIJING — Royal Dutch Shell PLC is “moving East” to countries including China and India to take advantage of booming demand for oil products, a senior Shell executive said.

Demand in Asia is growing strongly along with the region’s economies, while demand in Europe and the U.S. is moderating, because of high pump prices, higher vehicle efficiency and greater use of substitutes such as biofuels, said Rob Routs, Shell’s executive director of downstream operations. In the oil business, downstream typically refers to the business of refining oil into fuels like gasoline and selling them.

Mr. Routs said refining capacity in Asian countries will increase 22% by the end of 2010.

His comments are part of an industry shift toward Asia, which is seen as the biggest energy growth area in coming years. Refining and chemical companies, ranging from Exxon Mobil Corp. to Saudi Arabia’s state oil company, Saudi Aramco, have struck deals in recent months to feed China’s growing demand for fuel.

In Europe, demand for gasoline has fallen about 5% so far this year, while demand for diesel is flat, he said. In the U.S., demand for oil in the third quarter grew 0.6% to 0.7% compared with 1% a year earlier, he said.

Mr. Routs said he believed speculation is driving current high prices for oil and that there is enough crude available.

When asked if Shell had been elbowed out of a refinery investment in southern China by Kuwait Petroleum Corp. and China Petroleum & Chemical Corp., Mr. Routs said Shell isn’t giving up on talks with Kuwait Petroleum on refinery investment in China and is “teaming up” with that company on refinery options globally. He declined to elaborate.

–Renya Peng

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