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Shell CEO on higher oil prices, operations in Nigeria, Russia

Royal Dutch Shell CEO Jeroen van der Veer said there were now hard feelings in relation to Shell’s sale of its controlling stake in the giant Russian Sakhalin-2 project to Gazprom last year.

“If this is something that bothers you, you should not participate in international business. What we have learned from this is that you can only work with large Russian partners in Russia.” In general though the company prefers to go it alone, certainly in contrast to the old-style joint venture partnerships with international oil companies, which were designed to spread risk. “It is becoming increasingly important to distinguish yourself from the rest by offering advanced technology, it is also becoming more important to take our own lead in projects,” van der Veer said, pointing to Shell’s Pearl gas-to-liquids project in Qatar which does not involve other oil companies.

But Shell will need to work with Russian partners if plans for a major liquid natural gas project in the Jamal peninsula in the far north of Siberia come to fruition. Van der Veer was recently in Moscow with a Dutch industrial consortium and submitted plans to President Putin for an LNG project at the large gas field. “It really is very early days yet, but it’s also extraordinary that a broad consortium of specialist companies put a joint proposal on the table,” of which Shell would bring its LNG technology to the project. “I also observed serious interest from Russian participants at the meeting,” van der Veer added.

The interview went on to set out Shell’s strategy for its stricken operations in Nigeria, some parts of which have been shut following violence in the Niger Delta, as well as van der Veer’s view of Shell’s forced sell-down of its stake in the Russian mega-project Sakhalin-2. Van der Veer said Shell would continue to invest in Nigeria provided its employees can work there safely and he also warned that production would fall rapidly if investment in the Nigerian oilfields was discontinued.

“Nigeria is very rich in oil and gas, onshore and offshore,” he said. “If you look at the long term, i.e. over decades, these reserves will indeed be produced. We can and want to participate in this, but only if our people can work safely there.” Van der Veer said high oil prices are slowing down new projects because governments are taking longer to negotiate their slice of revenues. “It is evident that active government interest is delaying projects,” van der Veer said in an interview published in Shell’s Dutch in-house magazine this month, adding that, “government negotiations for their share of the revenues are lengthier than in the past.” He refuted the idea that higher oil prices would actually accelerate decision-making, saying “in reality the opposite is true.” And ultimately this will impact on the speed at which new projects can be taken into production, van der Veer warned, although he did not specify which Shell projects might be affected. (Rigzone)