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Shell CEO Jeroen van der Veer says the world will need everything, including biofuels

upstreamonline image Jeroen van der Veer

Shell shock?: Shell chief executive Jeroen van der Veer says the world’s remaining easily accessible oil and gas supplies will not be enough to meet future demand

UpstreamOnline: Producers in pound seats in Rome

By Upstream staff

Consumer countries and international oil companies keen to gain greater access to the world’s energy resources are likely to walk away empty-handed from talks with producer nations in Rome.

Record high oil, which struck $117 a barrel on Friday, has helped to drive up the profits of oil majors, but it has also increased the spending power of national oil companies and made them ever more reluctant to grant access to their resources.

“The relative positions of international energy companies and national energy companies are changing – and not in our favour,” Paolo Scaroni, chief executive of Italian oil and gas company Eni said in a speech at the opening of the International Energy Forum (IEF), Reuters reported.

Opec member Venezuela, under President Hugo Chavez, has spearheaded a global trend towards resource-holders seeking to maximise their returns from their energy wealth.

International companies have found themselves faced with tougher terms and shut out of the best energy territory.

During the 1970s, the international oil companies controlled nearly three-quarters of global oil reserves and 80% of production, Scaroni said.

Now, they control 6% of oil and 20% of gas reserves, and 24% of oil and 35% of gas production, he said. National oil companies hold the rest.

There is little sign the trend will reverse.

But national oil companies still have some need for co-operation with foreign investors as international and national producers alike battle with cost overruns, staff shortages and the difficulty of extracting oil and gas from deeper, more remote and more complex fields.

To keep pace with energy demand, which is expected to increase by more than 50% by 2030, the IEF has said, the world will not only need more oil.

“Despite high prices, demand is not dropping, there is only slower growth. Easy oil and easy gas cannot supply all that surge in demand,” Shell chief executive Jeroen van der Veer told reporters.

“So it is not a matter of choice, do we do coal, or oil, or nuclear? The world will need everything, including biofuels. You name it.”

In the immediate term, oil markets at least are well-supplied, Opec members have said, making clear the IEF talks in Rome would not be the occasion to revise their output policy.

But they have said they would pump more oil if necessary.

Producers are also keeping a nervous eye on the impact of high prices on demand and the development of alternative energy.

Shokri Ghanem, head of Libya’s National Oil Corporation, said consumer countries and international oil companies had to accept the world was changing.

“When the prices went down in 1990s, we accepted to give them a higher share … Now they have to accept a lower share, because they have windfall profits,” he said.

But Libya remains relatively open as it seeks to develop reserves that were hobbled by years of international sanctions.

“We are opening our doors to different countries, to work in our country. it is in our advantage to have oil companies working there,” Ghanem said.

21 April 2008 02:59 GMT  | last updated: 21 April 2008 02:59 GMT

http://www.upstreamonline.com/live/article152788.ece

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