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We’re in the Arctic for the long term, Shell insists, despite risk to 2013 drilling plans

Royal Dutch Shell is in the Arctic for the long term, insisted chief executive Peter Voser, despite casting doubt over the company’s 2013 Alaskan drilling plans and warning he could not rule out further “incidents” after a series of mishaps.

The Kulluk drilling rig which ran aground off Alaska on New Year’s Eve. Photo: AFP

By 9:02PM GMT 31 Jan 2013

Mr Voser was speaking as Shell unveiled a 6pc fall in profits to $27bn (£17bn) for 2012, as fourth-quarter earnings came in below expectations because of a surprise slump in exploration and production profits.

Shell has spent about $5bn over seven years on its controversial Arctic exploration campaign but has yet to be allowed to drill into potentially oil-bearing rocks.

Setting out the company’s intentions to drill more than 40 conventional oil and gas exploration wells this year, Mr Voser said on Thursday that the Arctic was counted within those plans.

However, he added it was “too early” to say if work there would go ahead after the problems it had “run in to” in Alaska. These included its drilling rig Kulluk being damaged after running aground on New Year’s Eve and regulators demanding improvements to an oil spill response vessel and another drilling rig.

Shell’s 2012 operations are being reviewed both internally and by US officials. “We will wait for those [reviews] before deciding on the next steps in Alaska,” Mr Voser said.

He played down fears that further delays might cause the company to abandon its entire Arctic campaign.

“When you look at a 30 to 40-year time horizon, does a year drilling matter? No it doesn’t,” Mr Voser said. “I am convinced that the Arctic in general will be developed … by companies which have the technology and the operating procedures like we have. Clearly I see Shell operating in the Arctic in the future.”

Shell will learn lessons from last year’s incidents, Mr Voser said, although he could not yet say what those lessons were.

“All businesses have risks and you need to manage those risks. We do it as good as we can, we learn when it doesn’t work and we will manage this going forward. I can never say there will be never an incident.”

He strenuously denied that attempts to avoid $6m in tax had played any factor in Shell’s decision to move the Kulluk rig on its ill-fated voyage, insisting comments from a Shell spokesman appearing to say as much were “taken out of context”.

Elsewhere, Mr Voser said the company saw potential in European shale gas and did “not rule out” opportunities in the UK, but denied it was eyeing UK shale firm Cuadrilla.

In Russia, discussions were “ongoing” with partners to seek more investment opportunities, which was “strategically important”, Mr Voser said. But he suggested Shell was unlikely to look at the Russian Arctic given its “substantial” portfolio in the Arctic region in other countries.

Shell said its dividend for the first quarter of 2013 was expected to be 45 cents, a 4.7pc increase on the same quarter of 2012.

The shares fell 2.8pc to £22.41.

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