Jeroen van der Veer, chief of the Royal Dutch/Shell Group, said on Wednesday that the company would spend more on research, focus on big technology-driven projects and possibly acquire other oil producers and reserves to increase production by 30 percent as planned by 2015.
Van der Veer, who took the helm 15 months ago after Shell was forced to admit it had overstated its oil and gas reserves, said earlier this year that the company planned to produce 5 million barrels of oil a day in a decade, up from about 3.5 million to 3.8 million now. This week, he presented his top managers with more details of that 10-year plan, and briefed journalists on it on Wednesday at Shell's London headquarters.
Most of the shift in strategy focuses on making the company an indispensable partner to countries rich in oil and natural gas. Several of the world's top energy companies are quietly following this plan, as oil in geographically accessible areas dries up and exploration shifts to remote locales, or to countries where governments are reluctant to cede control of their resources to Western oil companies.
Key changes at Shell include increasing the company's participation in what van der Veer calls elephant projects, or projects requiring several billion dollars in investment. To date, Shell is involved in three such projects with government and industry partners: in Sakhalin, Russia; in Bonga, off the coast of Nigeria, and Nanhai, China. By 2015, the company plans to be involved in 10 such projects, he said.
In a related move, Shell is starting an internal program to generate more creative proposals to encourage joint ventures with government-owned oil companies and countries with big reserve bases. The company also plans to increase its research and technology budget, currently US$553 million a year, by an unspecified amount.
"Shell is spelling out what a lot of oil companies are already doing," said Lucas Herrmann, a Deutsche Bank analyst in London.
"If it helps them gain access, when access is an issue, I think it's a positive move," he said.
Shell has generally had good technology, Herrmann said, and "can use its expertise and ability to arbitrage markets to appear the more attractive partner."
Aside from its growth plans, Shell will be paring back some areas, van der Veer said. The company will be involved in about 100 countries by 2015, down from about 140 now.
Shell will continue to invest in renewable energy, where it has already spent about US$1 billion, he said. Right now these energy sources are still "simply too expensive for consumers." He said he did not see renewable energy sources taking off within the company's 10-year time outlook.
ExxonMobil's chief executive, Lee Raymond, recently accused his peers of "playing" the renewable issue, even investing in such projects though oil companies see little future in them. It is a charge van der Veer denied on Wednesday.
"That's his problem," van der Veer said, when asked about Raymond's comments.
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