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Reuters: INTERVIEW-Shell CEO: no plan to spin off renewable energy ops

Mon Mar 17, 2008 3:55pm GMT 

*No plans to spin off renewable energy businesses

*Wants closer integration of units with hydrocarbon ops

By Tom Bergin

LONDON, March 17 (Reuters) – Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research) is not planning to spin off or part sell its renewable energy businesses as rival BP (BP.L: Quote, Profile, Research) is considering, and instead wants closer integration of the units with its core hydrocarbon operations, Shell’s chief executive said on Monday.

Jeroen van der Veer told Reuters in an interview that Shell was building the green energy businesses for the long term, and dismissed concerns about the short-term value of the operations to share prices.

“It’s more basic than that … 50 years from now, we think about one third (of total energy use) will be from renewables,” he said. “You only build big businesses if you expect the profitability there.”

Shell and BP are the leading investors among the international oil majors in renewable energy. Each has invested around $1 billion in the past five years.

However, BP’s CEO Tony Hayward said last month that he believed BP’s shares had not benefited from the investments. In an about-face from his predecessor, John Browne, said he was examining ways, including a part flotation, that the value in the operations may be unlocked for shareholders.

However, van der Veer said Shell wanted to go in the opposite direction, bringing operations such as wind and solar power and biofuels — fuels produced from crops — closer to core units.

“We think it is better to integrate it. Like biofuels, we think you should integrate it with oil products (the refining division),” he said.

Gas and power unit boss, Lynda Cook, whose portfolio includes wind energy, reiterated the strategy, saying Shell, like BP used to have a separate division which encompassed alternative and renewable energy but that synergies were seen by integrating it with the core oil and gas business units.

“If it’s something strategic and we have a competitive advantage, we prefer to keep it close,” Cook told Reuters.

(Editing by Erica Billingham)

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