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Shell to sell petrol stations around the world

Times Online

March 17, 2010: Robin Pagnamenta Energy Editor

Royal Dutch Shell will sell full or part-stakes in as many as 9,000 petrol stations worldwide and cut a further 1,000 jobs as it intensifies its global cost-cutting.

The announcement came as Shell appeared to be edging closer to a deal with Arrow Energy to bolster the group’s position in Australia’s fast-growing industry supplying coal-seam gas to China and South-East Asia.

Peter Voser, the chief executive, said that Shell intends to leave about 30 of the 90 countries in which it operates petrol stations. The move, which is already under way, is part of a focus on more profitable markets and on exploration and production.

“We are leaving retail markets where we have low volumes,” Mr Voser told Shell’s annual strategy briefing in London. These would include Greece, Sweden, Vietnam and New Zealand.

Globally, Shell holds interests in about 45,000 petrol stations, of which just under 30,000 are operated directly by the company. Yesterday it indicated that by 2012 it would sell about 2,000 sites outright and cut the number that it operated directly by almost 7,000.

Sites no longer operated directly would follow a model that Shell has pioneered in America, where its retail sites retain the Shell brand and are supplied wholesale by the company but are operated by third parties.

Shell is selling fuel stations in Spain and Portugal. In France, it will leave many of its smaller, regional stations but plans to retain its more profitable, high-volume motorway network.

Britain, where Shell operates about 900 fuel stations and is the biggest player by volume in the retail market, is not expected to bear the brunt of the sales.

Richard Savage, of Mirabaud Securities, said that the move reflected an effort “to release capital to spend more on production”.

The announcement came as Mr Voser said that Shell expected to boost crude oil production by 11 per cent to 3.5 million barrels a day by 2012, up from 3.15 million — reversing seven years of consecutive declines. “All this is underpinned by a new wave of project start-ups,” Mr Voser said. “Beyond that we have an upstream portfolio that can grow to at least 2020.”

He also announced a further 1,000 job cuts, raising the total expected to 7,000 during 2009-11. Shell employed about 102,000 people before Mr Voser revealed the first phase of his reorganisation last July.

He called for “more focus and more urgency”, adding that most of the cuts would be in refining and marketing — which is struggling in the face of the worst industry downturn in 20 years — and in middle management. “The company had become too complicated and slower to respond than we’d like, so we are sharpening up,” he said.

The chief executive’s remarks came as Arrow Energy said that it was in “active discussions” with Shell and Petrochina over their joint $3 billion takeover offer.

Shell, which confirmed the talks but declined to comment, also announced positive news on the discovery of new supplies of oil and gas. The company said that 2009 was the “best year for exploration in a decade”, after finds in Australia and the Gulf of Mexico gave it new reserves equal to almost three times the amount of oil and gas that it produced.

Shell’s reserves at present production rates had increased from ten years at the end of 2008 to 11.9 years at the end of 2009.


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