By Michael Steen in Amsterdam
Published: January 8 2008 02:00 | Last updated: January 8 2008 02:00
Record oil and gas prices are delaying major hydrocarbons projects as governments haggle with oil companies over taking a higher share in revenues, Royal Dutch Shell’s chief executive said yesterday.
Jeroen van der Veer, who has overseen heavy investment in “unconventional” oil sources such as Canada’s oil sands, also expressed surprise at the small effect on demand that crude prices near $100 a barrel have had.
In an interview for Shell’s in-house magazine, Mr van der Veer said: “It’s clear that the active interest shown by governments is delaying projects. They are negotiating longer than they used to over their share in revenues . . .
“Over time, that will influence the pace at which new projects can start producing.”
He did not name any projects delayed by such negotiations. The observation comes at a time of growing resource nationalism, where states seek a higher share of oil profits.
Shell is a member of the seven-strong Kashagan consortium that will operate the highly complex but potentially huge field in the Caspian Sea. Project delays have prompted Kazakhstan’s government to demand compensation from the firms and a greater stake for its state-owned oil company.
That project – combining the harshest of offshore conditions, toxic gas and a fragile environment – is typical of those Mr van der Veer has championed. But he said he would prefer to avoid international consortia and operate alone, as Shell does on the Pearl gas-to-liquids project in Qatar.
The focus on expensive projects will not change, he said. “Easy oil can be often be done well by [state-owned] national oil companies, look at Russia for example,”
Mr van der Veer added that the “big lesson” of Sakhalin-2, the oil and gas field in Russia’s Far East where Shell was forced to relinquish control to Gazprom in 2006, had been: “In Russia, you can only work with big Russian and Japanese partners.”
Copyright The Financial Times Limited 2008
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