Royal Dutch Shell Plc  .com Rotating Header Image

Shell steps on the gas in Qatar

Shell’s gas-to-liquid project in Qatar home

• Shell’s chief executive reveals two $18bn gas projects
• Despite oil expansion, gas is key to company’s future

Tim Webb, Tuesday 24 November 2009 21.06 GMT

Peter Voser is reeling off Shell’s projects to develop the next generation of biofuels when he gets to its algae scheme in Hawaii. He stops mid-sentence with a doleful look on his face. “I’ve never been to Hawaii,” says Voser, whose whistle-stop tour of Shell’s operations around the world most recently took him to Qatar and Nigeria. “Such are our hardships,” he jokes.

Voser was Shell’s finance director until he took over from Jeroen van der Veer on 1 July as chief executive. He tells the company’s in-house magazine “I love a down-to-earth mentality” and “I’m not a big-ego chief executive type”, befitting his Swiss nationality.

But this week, Voser rolled out Shell’s big guns – two mammoth $18bn (£11bn) gas projects in Qatar, to be precise – in a most un-Swiss manner. On Tuesday, he and Shell’s top executive team led 50 analysts and investors around the two huge construction sites that hold the key to Shell’s future growth: the Qatargas 4 liquefied natural gas project and the Pearl gas-to-liquid project, the world’s largest of its kind. When they ramp up fully, with large-scale production due to start in 2011, they will produce about 350,000 barrels of oil equivalent a day, or about 10% of Shell’s current daily production. Shell said that, once on-stream, the projects would generate $4bn of cashflow and mean that by 2012 the company will be producing more gas than oil.

Shell also announced that testing at the Pearl project had begun but confirmed that the start-up of the Qatargas 4 project would be delayed by 10 months, to the end of 2010. Analysts said they had expected delays but Samuel Ciszuk, analyst from Global Insight, said: “It still does not look very good from a project-management point of view.”

Now is a good time to trumpet Shell’s mega-projects, and not just for the benefit of new man Voser. When Shell announced results last month, finance director Simon Henry was downbeat about next year, which could see Shell miss its production targets, particularly with confirmation of the Qatargas 4 delay.

The credit crunch and the resulting slump in oil prices forced Shell, like the rest of the industry, to put on hold expensive new projects such as oil sands in Canada. It has projects under construction that will when completed add another 1m barrels of oil a day but most of these will not come on stream until 2011 or afterwards. Shell wants investors to focus on the rewards to be reaped in 2011 and beyond, rather than next year’s slim pickings.

Voser said that Shell was also reviewing its procurement policy. As a result, of the annual $7bn it spends on procuring drilling services and equipment, for example, it has found 15% of savings. This is partly the result of buying more equipment from China, which is about 20% cheaper than suppliers in other countries.

Earlier this year, Shell said it would refocus its investment on alternative energy on carbon capture and storage (CCS) and biofuels, and would not build any more wind farms. Voser explained that with an estimated1bn new cars on the road within the next 40 years, all types of cleaner technologies – including biofuels – would be needed. Many of those will also be powered by electricity generated by coal plants, which, in order to be truly green, needed CCS to bury their emissions.

Voser said that while he doubted that the Copenhagen climate change summit would result in a firm deal to replace Kyoto, he hoped that CCS would be accepted as a “mitigation technology” that developing countries would receive financial support to develop. “That is on the top of my wish list,” he said.

Like much of the industry, Shell is also going through a disruptive restructuring, which it has called Transition 2009 and will result in 5,000 people losing their jobs, many of them managers. The thousands of staff who are having to apply for the 15,000 new roles being advertised internally will find out in the next 10 days whether they have been successful, and Voser said yesterday that the process should be complete by January.

SOURCE ARTICLE and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Shell steps on the gas in Qatar”

Leave a Comment

%d bloggers like this: