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Shell CEO, like OPEC, sees no oil shortages now

  • Reuters
  • Monday June 2 2008
(Adds quotes, details, background)
By Chua Baizhen
KUALA LUMPUR, June 2 (Reuters) – Royal Dutch Shell Chief Executive Jeroen van der Veer said on Monday he did not see any shortage of physical oil supplies, echoing the view of many OPEC ministers who say the world market is well-supplied.
Oil prices have risen more than fourfold since 2004 and gained about a third this year, partly on increased fears among investors that producers will struggle to produce enough oil to meet demand in a decade’s time.
“There are no physical shortages in the world. We don’t have ships waiting in the Middle East, no people queuing up for gasoline,” van der Veer told reporters in the Malaysian capital, where he was briefing on Shell’s Asian business plan.
“From a stocks point of view the whole value chain works well… It (the price) has a lot to do with psychology.”
U.S. crude prices hit a record high of $135.09 a barrel last month before retreating to below $126.00 on Monday.
Ministers from the Organization of the Petroleum Exporting Countries have blamed the falling dollar, geopolitical tensions and factors beyond their control for the price spike. Most recently U.S. politicians have put pressure on regulators to stem the influx of investment funds into the market.
“Oil prices, like many other commodities group, have relatively high volatility. That is difficult to manage,” van der Veer said.
Asked for his views on governments trying to have a larger oil pie, van der Veer said it was nothing new that with price rises, governments would try to increase their stake in projects.
But with the hefty price of investments nowadays, he said companies will have to be “very careful with where they invest”.
“We think it is very important that governments stick to contracts which they have crossed in the past,” he added.
In May, Nigeria sought $850 million from Shell and $646.3 million from Exxon Mobil, which the country’s president said was accrued to state oil firm NNPC as capital allowance from two offshore fields.
NNPC and the government were also seeking $414.6 million they said were owed from gas sales and taxes for Shell’s Bonga fields.
President Umaru Yar’Adua had said a year ago that the world’s eighth-largest oil producer wanted a greater share of profits from offshore fields.
Van der Veer said he was also looking at security and project funding issues in Nigeria, which had taken a toll on Shell’s oil output and cost it to lose its position as the biggest producer in the West African country to Exxon Mobil.
“I’ll basically concentrate on how to get the situation for Shell (in Nigeria) right. I won’t be looking at everyday figures,” he said, referring to the competition with Exxon.
Shell said last week it could not meet all supply obligations for Bonny Light crude even though it had contained an oil spill following a pipeline attack in the Niger Delta.
Van der Veer said he did not have an update on the Nembe Creek trunk line, which carries 130,000 barrels of crude a day to the Bonny export terminal.
The Shell chief also said that while there should be no immediate concern about supply, the world must dig into less easily accessible energy sources to meet growing future demand.
“In addition to easy oil and easy gas, we need unconventionals and we need renewables,” he said.
Van der Veer, who is due to retire next year after almost four decades with the company, is in Malaysia to meet top Shell executives.
In recent years, he has shifted Shell’s focus towards more complex “unconventional” oil and gas projects, such as gas-to-liquids plants that turn natural gas into motor fuel and oil sands operations in Canada that squeezes crude from bitumen-laden soil.
On Monday, the Anglo-Dutch oil major said it would pay $739 million for an interest in Australia Arrow Energy’s coal seam gas projects, which van der Veer said was a substantial enough stake for now.
“I expect companies like Shell to move all the time towards more difficult oil and gas, where we can apply our technology… A lot of the easy oil and gas can be done by national oil companies,” he said.
(Editing by Ramthan Hussain) and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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