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Shell planning for long downturn

Reuters UK

Tue May 19, 2009 11:15am BST

THE HAGUE (Reuters) – Royal Dutch Shell (RDSa.L) is assuming the economic downturn could last several years when assessing the outlook for oil prices and planning investment.

Chief executive Jeroen van der Veer also said on Tuesday that this year the company was focussing on growing its dividend and planned to keep investments at a relatively high level.

At the company’s annual meeting of shareholders, Van der Veer said he expected volatility in oil prices and downstream margins to continue.

“We have to plan on the basis that the downturn could last for several years,” Van der Veer said in a speech.

From a peak of near $150 (96.95 pounds) a barrel last July oil collapsed to around $30 a barrel last December. Since then it has doubled to around $60.

Van der Veer also said supplies of “easy oil” — that which is relatively easier to drill for and transport — will not match demand in the long term. Shell would focus its renewables efforts on developing biofuels in the next few years, he said.

He also said the Sakhalin II liquefied natural gas (LNG) project in eastern Russia was progressing ahead of schedule, producing 9 cargoes against a target of 3 up to May 13.

(Reporting by Catherine Hornby, writing by Catherine Hornby and Ben Berkowitz; Editing by Dan Lalor)

 

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