Shell sees output near 'low end' of '07 target

Royal Dutch Shell PLC expects production to average "near the low end" of its target of 3.3-3.5 million boe/d during 2007 because of problems in Nigeria and the reduction of its majority stake in the Sakhalin 2 project in Russia (OGJ, July 16, 2007, p. 18).

July 27, 2007

2 min read

Uchenna Izundu
International Editor

LONDON, July 27 -- Royal Dutch Shell PLC expects production to average "near the low end" of its target of 3.3-3.5 million boe/d during 2007 because of problems in Nigeria and the reduction of its majority stake in the Sakhalin 2 project in Russia (OGJ, July 16, 2007, p. 18).

During a conference call to discuss second quarter results, Jeroen van der Veer, chief executive, stressed that Shell is focusing on "rejuvenating" production through unconventional projects, such as oil sands in Canada and its gas-to-liquids plant in Qatar.

Shell could not give a date when full production will resume in Nigeria, where its infrastructure has been attacked by militants and employees have been kidnapped. Shell lost production of 195,000 b/d in the Niger Delta during the second quarter.

Oil and gas production across the group for the quarter was 3.2 million boe/d, compared with 3.3 million boe/d a year ago. "Second-quarter 2007 production was impacted by lower demand in Northwest Europe as a consequence of the continued warm weather and lower production in Nigeria due to the security situation," Shell said.

Shell will make a final investment decision by yearend on whether to expand its Port Arthur, Tex., refinery to 600,000 b/d by 2010. The company's strategy is to focus on developing large, complex refineries, and it has sold smaller facilities.

The company earned $8.7 billion, which was an 18% increase on its income for first-quarter 2005. This was attributed to gains from its refineries that offset the impact of lower oil and gas production.

Contact Uchenna Izundu at [email protected].