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Shell output up

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Financial Times: Shell output up

Published: April 30 2008 03:00 | Last updated: April 30 2008 03:00

For Royal Dutch Shell, which has been dogged by concerns about falling production, the rise in its first-quarter output reported yesterday, though small, was particularly welcome. The reason was the growth in its gas business.

Shell still has 164,000 barrels per day of production shut-in as a result of the violence in Nigeria, and its total crude oil production was 6 per cent lower in the first quarter of this year than the equivalent period of 2007. But gas production was up 9 per cent.

Peter Voser, the chief financial officer, said: “We are becoming a more gas-driven company.”

Shell is also highlighting the contribution of its Canadian oil sands division, publishing the results separately, which enables rough comparisons of profitability to be made.

The business appears to be commercially attractive in spite of its high costs: profit from the oil sands of $249m was equivalent to about $19 per barrel sold, compared to an average of $16 per barrel of oil equivalent produced in Shell’s conventional exploration and production business.

Sales volumes from the oil sands rose only 1 per cent, but Shell has a big expansion project under way. It is part of the $26bn-$27bn investment plan Jeroen van der Veer, chief executive, called “the largest capital spending programme in our industry today”.

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