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DEUTSCHE SHELL OUTLINES PLANS FOR 1994 SPENDING

April 18, 1994

Deutsche Shell AG plans to invest about 5 billion deutschemarks ($2.92 billion) in its German petroleum, petrochemicals, and natural gas segments during the next 5 years. Peter Duncan, Deutsche Shell chairman, said his company also plans to reduce fixed costs by 150 million deutschemarks ($88 million)/year. That amounts to a 10-15% cut. "Reorganization of Deutsche Shell will shortly result in a strengthening of earning power," Duncan said. "The first signs of this are evident."

Deutsche Shell AG plans to invest about 5 billion deutschemarks ($2.92 billion) in its German petroleum, petrochemicals, and natural gas segments during the next 5 years.

Peter Duncan, Deutsche Shell chairman, said his company also plans to reduce fixed costs by 150 million deutschemarks ($88 million)/year. That amounts to a 10-15% cut.

"Reorganization of Deutsche Shell will shortly result in a strengthening of earning power," Duncan said. "The first signs of this are evident."

Deutsche Shell's operating profit for 1993 was 340 million deutschemarks ($199 million), up from 200 million deutschemarks ($117 million) in 1992.

PETROLEUM PRODUCTS, CHEMICALS

Shell's German refineries have total capacity of 12.1 million metric tons/year. Despite western Europe's surplus in refining capacity, Shell's plants are making a profit.

Shell's gasoline sales in Germany amounted to 17 million metric tons in 1993, up slightly from 1992. Shell is No. 2 in the German market with 1,713 retail outlets. The company plans to achieve a similar position in the former East Germany, where it has 100 service stations and plans to open another 50-60.

Shell also is involved in a 100 million deutschemark ($58 million) joint venture with Esso AG and Aral AG of Bochum to build a petroleum products depot near Dresden. This is expected to be completed in 1995.

Chemical operations showed the only loss for Deutsche Shell last year. Operating loss for 1993 was 95 million deutschemarks ($56 million), an improvement from the 120 million deutschemark ($70 million) loss of 1992.

Deutsche Shell is reorganizing its chemical segment. Last year the company set aside 220 million deutschemarks ($129 million) to cover the cost of staff cuts. It also sold two affiliate companies involved in agricultural chemicals at yearend 1993.

The effect of reorganization on petrochemicals will depend on acceptance by the European Union of the Shell/Montedison SpA merger plan.

Shell and Montedison plan to merge polyolefins assets. This includes a 120,000 metric ton/year Shell polypropylene plant at Cologne (OGJ, Jan. 10, p. 34).