By Danny Fortson
Tuesday, 18 March 2008
Royal Dutch Shell plans to quintuple production in the controversial Canadian tar sands in an attempt to halt falling production from resource nationalism and the drying up of old fields.
At its annual strategy briefing in London yesterday, Europe’s largest oil company said that its net reserves stayed at 11.9 billion barrels last year – equal to the previous year’s total – as new discoveries were offset after the governments of Russia and Kazakhstan forced the company to give them larger stakes in the Sakhalin 2 and Kashagan projects respectively.
Amid that worsening geopolitical backdrop, the company said it would push further into tar sands in Canada, where it and its partners – Chevron and Marathon Oil – have acquired mining rights to 125,000 hectares of land in Alberta.
The companies currently produce 155,000 barrels per day from the Athabasca oil sands. They have approval to produce 470,000 barrels and have applied for licences to produce another 300,000 per day, a development sure to rile the environmental lobby.
The company also refused to give an exploration forecast for the next two years amid continued uncertainty in Nigeria and the early stage of several major projects being funded in what, at $25bn (£13bn), is the largest capital investment programme in the industry.
“We are not giving any guidance between now and 2010 because there are a lot of moving parts, especially in Nigeria,” said Malcolm Brinded, the head of exploration and production.
The opaque outlook will do little to reassure investors, who have not forgotten the debacle in 2004 when the company admitted it had booked reserves it did not have, leading to nearly half a billion dollars in class action lawsuits. But Shell did say yesterday that from 2010 it expects to be able to grow reserves by 2 to 3 per cent annually.
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