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Big-spending Shell ready to overtake arch-rival BP

London Evening Standard

25 September 2009

Shell is close to overtaking BP as Britain’s biggest producer, research showed today.

Held back by seven years of falling production, Shell’s output levels are about to erupt way beyond those of its arch-rival as a host of new investments in projects start to pay off.

Chief executive Peter Voser spent a record amount last year on expansion around the world, ranging from a massive oil sands development in Canada to the Sakhalin II project in Russia.

As a result, oil and gas output will be up a third, or 1 million barrels a day by the end of 2012. At those breakneck levels, Shell will be pumping out 4.25 million barrels against BP’s 2012 estimate of 4.1 million.

The shift will put BP back in second place after Shell faced production shortfalls from projects, most notably including Nigeria, where militants have repeatedly disrupted its operations.

“Shell will have so many startups in the coming five years that it will be impossible for European peers like BP to keep up,” said Peter Heijen, analyst at Dutch broker Theodoor Gilissen Bankiers.

Heijen is advising clients to buy the shares in anticipation of a 14% climb during the next year.

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