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Shell to make major investment in Malaysia over next 5 years

Tuesday June 3, 2008

Shell aims to invest RM10bil in five years

 

Jeroen van der Veer

KUALA LUMPUR: Shell Malaysia plans to invest some RM10bil in the next five years to grow its business in the country, said chairman Datuk Saw Choo Boon.

“We are strong in exploration and production (E&P), gas and the downstream business but E&P will take the bulk.

“We have been here since 1891 and intend to stay for a long time. There is no question about it that we will continue to do our best to grow the business here,” he said at a Shell media roundtable yesterday.

On a global basis, Royal Dutch Shell plc chief executive Jeroen van der Veer told the roundtable that the oil multinational would invest about US$27bil in capital expenditure this year, similar to last year.

According to Shell’s March strategy update, the group is building over 50 large projects that will underpin new cash flow the next few decades. In the upstream segment, Shell has over 10 billion barrels of oil equivalent (boe) resources under construction, which will add about one million boe/day of production.

Van der Veer said world energy demand was estimated to double in 2050 as the world population grew to nine billion.

Royal Dutch Shell plc chief executive Jeroen van der Veer (left) and Shell Malaysia chairman Datuk Saw Choo Boon.

“We estimate energy demand to be about 50% more by 2030. Conventional or “easy” oil and gas (O&G) will be insufficient to meet demand. Hence, we will need unconventional O&G and renewables,” he said, adding that Shell was building its position in unconventional O&G such as venturing into oil sands in Canada and coal seam gas in Australia.

Yesterday, Shell signed a preliminary agreement with Australia’s Arrow Energy Ltd to jointly develop projects to extract clean-burning natural gas from coal deposits in Australia, China, Indonesia, Vietnam and India.

Van der Veer expects an increase in fossil fuel supply such as coal, oil and gas in the coming years as renewables were still too expensive for consumers.

On oil price, he said it was difficult to forecast the price of the commodity.

“There are no physical shortages of oil in the world.

“We don’t have ships waiting in the Middle East or people queuing up for gasoline. From the inventory point of view, the value chain is working well so a lot of it has to do with psychology,” he said.

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