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Daily Telegraph: Shell CEO says oil price is slowing investment

Daily Telegraph image: Jeroen van der Veer

The Shell boss Jeroen van der Veer says higher oil prices is not all good news for producers

By Russell Hotten
Last Updated: 4:08pm GMT 07/01/2008

The chief executive of Royal Dutch Shell, Jeroen van der Veer, has warned that higher oil prices are slowing the start of new production projects.

Governments, which award operating licenses, are driving a harder bargain to ensure they get a share of the revenues.

Mr van der Veer told Shell’s in-house magazine that governments’ “active interest” in their domestic oil industry is starting to “have an influence on the tempo in which new projects start production.”
  
He said: “You’d think that higher oil and gas prices result in an acceleration of the decision-making, but in reality the opposite happens….[Governments] negotiate longer than in the past about their share in the proceeds.”

Last week oil prices in New York briefly topped $100 a barrel for the first time as the cold weather in Europe and America boosted demand and violence in Nigeria, Africa’s largest producer, heightened concerns about a disruption to supplies.

Mr van der Veer told Shell Venster magazine that he was “relatively” surprised by the strength of demand despite the high oil price. “But I think that demand will react at the current price, albeit with a certain delay,” said Mr van der Veer, who expects slowing demand. There’s also a lot of psychology in the oil price, he said.

Shell, Europe’s largest oil company, invested about $2bn a month in 2007. The company estimates by 2015 about 15pc of its production will come from unconventional oil projects, such as its oil sands operations in Canada.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/07/bcnshell107.xml

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