Saturday 25 October 2014
 
»
 
»
Story

Oil prices will ease further this year: Shell CEO

Kuala Lumpur, June 5, 2012

Oil prices will weaken further in the second half of this year as demand reacts to a slowing global economy, while international political tensions ease, Royal Dutch Shell CEO Peter Voser said on Tuesday.

Brent crude this week dropped to a 16-month low below $96 a barrel as weak economic data from the US and China added to ongoing worries about the euro zone crisis, though prices moved back up to $98 a barrel on Tuesday.

'Global demand is softening, we have got recessionary elements in Europe, a small slowdown in Asia Pacific,' Voser told Reuters in an interview on the sidelines of the World Gas Conference in Malaysia's capital.

'At the same time, some of the geopolitical elements of price volatility over the past few months have kind of receded, and therefore we see a softening of prices which I expect to go well into the second half of this year.'     

The pace of oil demand would recover slowly in 2013, and prices would rise with it, predicted Voser, a Swiss citizen and 30-year Shell veteran, who took over as CEO almost 3 years ago. Ministers and central bankers from the United States, Canada, Japan, Britain, Germany, France and Italy will discuss the euro zone debt crisis later on Tuesday in a sign of heightened global alarm about the strains in the 17-nation European currency area.

Concern over the state of the world economy and ample global crude supplies have taken the spotlight from lingering tensions between Iran and Western powers, which just three months ago helped push Brent crude prices to above $128 a barrel.

Those concerns have eased, and Voser said the global oil market had enough supply to deal with the impact of the sanctions. US sanctions on Iranian crude buyers come into effect at the end of this month, while a European Union embargo banning its members from importing take effect on July 1.

'I think the world has dealt with that,' Voser said, when asked about the impact of sanctions on exports. All units operated by Shell have stopped importing Iranian crude, Voser said, though he declined to comment on Japan's Showa Shell, in which Shell has around a one-third stake and which imports Iranian crude.

Output from Iraq's giant Majnoon oilfield, which Shell is developing and operates, will reach 175,000 barrels per day (bpd) before 2015, up from around 65,000-75,000 bpd now, he said. Shell is in talks with Iraq to cut its eventual output target from the field from 1.8 million bpd to 1 million bpd in 2017, Reuters reported last month.

Speaking on the liquefied natural gas (LNG) market, Shell said exports of the fuel from the United States would help meet rapid growth in world demand. 'It's hard to see how the industry can lift supply to meet the speed of demand without a contribution from North America,' De la Rey Venter, Shell's head of global LNG, told the same conference earlier, adding he expected the global LNG market to remain tight until at least 2015 due to a dearth of new supply projects coming on stream as a result of a slowdown in investment after the global financial crisis.     

The market may be tight for longer, as the track record for project delays in the industry means that those scheduled to start in 2015 could actually start later. 'Projects with a notable delay have become the rule, not the exception,' Venter said.

Rex Tillerson, CEO of Exxon Mobil Corp, said his company, the world's largest publicly traded energy firm, is considering exporting LNG from the United States. Exxon Mobil has been North America's largest natural gas producer since it bought XTO Energy Inc in 2010.      

Asked at the conference whether Exxon Mobil planned to export LNG from the United States, Tillerson said: 'We are studying it.'     

Shell's Voser said he expects global LNG demand to double by 2025. Shell sold 18.83 million tonnes of LNG in 2011, up 12 percent from 2010 on higher output from Qatar, Nigeria and Russia. The company has 8 million tonnes per annum (mtpa) of LNG under construction, all in Australia, and has some 15 mtpa of new LNG capacity under study globally.

Shell, whose gas output is likely to outpace its oil output for the first time this year, is to anchor the world's largest floating offshore production vessel off northwestern Australia.
The Prelude project, likely to cost over $10 billion, will produce 3.6 mtpa of LNG by 2017 for energy-hungry Asia.

In March, Shell signed a production-sharing contract with China National Petroleum Corporation (CNPC) to develop a shale gas block in China, the first deal of its kind in the country.   - Reuters




Tags: Shell | economy | Oil Prices |

More Energy, Oil & Gas Stories

calendarCalendar of Events

Ads