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Royal Dutch Shell will not stand short in the international downturn

Gerson Lehrman Group - Intelligently Connecting Institutions and Expertise.

March 27, 2009

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.


Oil & Gas Journal Oil Diplomacy Editor Eric Watkins in Los Angeles reported on March 24 that Salym Petroleum Development (SPD) has signed a contract extension with Halliburton for exploration and production services in the Khanty-Mansi district of western Siberia. Salym is a joint venture between Royal Dutch Shell and Sibir Energy. The 4-year $100 million contract covers measurement-while-drilling, logging-while-drilling, drilling fluids and cementing services. Four hundred S-shaped wells plus extended-reach wells will be drilled to depths averaging 2,600 meters. SPD produces oil at West Salym, Upper Salym and Vadelyp fields. Earlier this month SPD awarded Schlumberger a three year extension for wire line logging services in Salym field. SPD has no plans to reduce output or cut capital expenditures in 2009. The company expects to produce 150,000 bbl/day during 2009-10. The company attained that rate in January which is the planned plateau level.


 The company recently announced ambitious plans to expand both upstream and downstream operations over the next few years. This year alone, Shell plans capital expenditures in the $31-32 billion range. New crude oil production is the key to maintenance of competitive ability in the dog-eat-dog world of the international oil and gas super giant companies. To fall behind is to invite a takeover. Russia is a strategic region for Shell. An abundance of oil and gas prospects exist in both East and West Siberia. Structures tend to be large and production rates can be high from newly discovered oil fields. Halliburton and Schlumberger are well-established in Russia and expect to obtain much of their profit in the future from providing oil field services in large but remote regions of the globe. Russia is high on their list of places where good money can be made. The Khanti-Mansi district is a mature producing region. The oil fields around Salymn village were discovered long ago. From the nature of the two contracts, the main work of SPD is redevelopment of depleted reservoirs using the latest technology. Projects of this type tend to yield high production rates from well-defined reservoirs with large volumes of oil in place remaining after production by primary depletion. With low production costs, these projects are therefore appropriate for the current economic environment. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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