Shell eyes Iraq as Nigeria raids continue 

By Jamie Dunkley

 

 

Royal Dutch Shell is turning to Australia, Brazil and Iraq to counter losses in the Niger Delta as the oil company raised investment spending targets for the year ahead.

	Continuing attacks from rebels in the Niger Delta have cost Shell 195,000 barrels a day

Chief executive Jeroen van der Veer said he would spend up to $36bn (£18bn) on drilling and acquisitions this year. 

His comments came as he unveiled a 33pc rise in second-quarter net profits to $11.6bn, boosted by record crude prices. The performance lifted first-half profits 41pc to $20.1bn pre-tax, on revenue up from $84.9bn last year to $131.4bn. 

Mr Van der Veer also raised Shell’s target for asset sales by $1bn to $5bn.

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The company’s output has taken a hit in recent years, after it was forced to sell control of its stake in Russia’s Sakhalin-2 venture and continuing attacks in the Niger Delta, which lost the company 195,000 barrels a day in the second quarter.

This week it suspended exports of Bonny Light crude after a raid.

Mr Van der Veer said: “We went through a difficult period in Russia a couple of years ago but have a long-term vision there and intend to continue to play a part in the country. In terms of Nigeria, we have a high appreciation of all of our staff that work there and understand that it is a challenging situation.

“We will look to go into countries with an acceptable fiscal risk. For example, our progression in Iraq is subject to the security situation but we are keen to make progress there. Nothing is signed yet, as many of the details take time to work out, but we are in active negotiations.”

Shell will focus on six key projects over the next 18 months including a liquified gas project in Australia, a gas and power development in Nigeria and the Ursa project in the Gulf of Mexico, which will ease oil recovery in the area. It also expects to develop exploration discoveries in Australia, Brunei and the US.

Additionally, the company hopes to complete the acquisition of Duvernay Oil Corporation for about $5.8m, including the assumption of debt, to expand gas output in Canada.

Mr Van der Veer, who is due to leave in July next year, was reluctant to outline his views on current oil prices – BP chief executive Tony Hayward recently blamed high prices on lack of adequate supply growth.

However, Mr Van der Veer said: “We are prepared for volatility in the short and long term.”

Shell shares eased 23 to £17.82.

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