The economic slowdown ‘creates opportunities for Shell to reduce supply chain costs, as spare capacity in the services industry comes into play’, declared CEO Jeroen van der Veer when he presented the Royal Dutch Shell 2009 strategy update in The Hague last month. ‘We don’t have a crystal ball on oil prices, so we are planning on the basis that the downturn could last more than a year.’ Shell launched very few new projects in 2007/08, to avoid the peak in the cost cycle. This pause, combined with Shell’s global scale, gives new opportunities to reduce supply chain costs ahead of launching new projects, he said.
Van der Veer added that Shell is continuing with plans to build new upstream and downstream capacity, while managing the near-term challenges of the global economic slowdown. The company will invest some $31-$32 billion in 2009. Major upstream investments currently under way include: developing oil and gas fields with more than 1 million boe/d of capacity, which will generate 2-3% annual production growth early in the next decade, to 2012 and 6.5 million tonnes per year of new LNG capacity, an increase of 40% over 2008 levels. Pre-FID options upstream could add more than 1 million boe/d of additional capacity, from a resources base that can support growth to at least 2020.
OE - April 2009
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