Shell cuts estimates for global short-term oil production growth
David Young
OGJ Online
LONDON, Sept. 19 -- Walter van der Vijver, CEO of Royal Dutch/Shell Group's exploration and production division, told financial analysts Wednesday that upstream production will grow an average of 3%/year to 2005, down on previous forecasts.
Speaking in The Hague, Van der Vijver, a member of the Royal Dutch/Shell committee of managing directors, said that his forecast has been lowered from earlier targets partly as a result of slower access than anticipated to major sources of reserves. In addition, some projects are taking longer to realize than first predicted, and some of Shell's more mature fields, in the UK and US particularly, are declining faster than before.
He explained that production in 2001 was likely to meet the target of 3.8 million boe/d at $14/bbl Brent, benefiting from the recent start-up of projects in the Gulf of Mexico and the Philippines. Output in 2002 production is expected to be similar.
Van der Vijver said growth in value is expected through a combination of portfolio developments, efficient use of capital investment, and focused exploration.
"We are currently developing projects from which we expect to produce by the end of 2005 over 1.2 million new boe/d. Capital investment in the upstream business will be in the range of $7 to $8 billion/year (US)," he said.
The key projects that will drive growth beyond 2005 will be in Brazil, Canada, China, Russia, Kazakhstan, and West Africa.
He added that Shell continues to improve performance through improved delivery of projects; an aggressive pursuit of value growth opportunities; constant pressure on the overall costs structure; and the enhanced global application of its technology. He said the upstream business expects to continue delivering 15% return on average capital employed at Shell's reference conditions.
Philip Watts, chairman of the committee of managing directors, said, "While we have lowered our volume projections, I am confident that our proven track record of performance, the underlying strength of our asset portfolio, and the team we have in place will continue to deliver leading returns to our shareholders."
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