2004/9/22 Shell

Shell Hosts Strategy Review: Regaining Upstream Strength, Delivering Downstream Profits
　
- $45 billion in capital expenditure 2004-2006 anticipated
- Focus on more Upstream gas and oil 
- Extend LNG leadership position
- Focus on profitability and cash flow from Downstream businesses
- $10-12 billion in divestments planned 2004-2006
- Higher energy price environment
　
At a Strategy Review in London today Shell outlines its strategic plans for its upstream and downstream activities. 

Jeroen van der Veer, Chairman of the Committee of Managing Directors chairs the session, with presentations also by Tim Morrison, acting Group CFO; Rob Routs, Group Managing Director (MD)/CEO of Oil Products and Chemicals; Malcolm Brinded, MD/CEO of Exploration and Production; and Linda Cook, MD/CEO of Gas and Power.  The presentations will be repeated in New York on September 23, 2004.

Group Strategy and Priorities

In his opening remarks, Mr. Van der Veer commented, "We have delivered sound financial results through the first half of this year, through some very tough times for Shell.

"Our strategy and priorities for the way forward are:

  • more upstream and profitable downstream 
  • raising the performance bar
  • focus on an ‘enterprise first' culture

"More upstream and profitable downstream requires: first, the reshaping of our portfolio through a step-up in organic investments to $15 billion per year; second, the ongoing divestment of non-strategic and underperforming assets; third, looking at focused acquisitions with a clear path forward to create value.

"Raising the performance bar means top quartile operational performance in all our businesses; consistently delivering projects on time, specification and budget and providing competitive returns with strong cash generation to fund growing dividends and investments.

"An ‘enterprise first' culture is essential. We are focusing on a simplified organisation and standardised systems and processes. Leadership, accountability and teamwork will be crucial to our success."


Delivering Downstream Profits

The Downstream businesses generate significant cash and earnings for the Group.  To extend this success the Group will:

  • Fully integrate Oil Products and Chemicals under a single leadership team and further implement global standardised processes.
  • Continue to strengthen the portfolio by shedding non-strategic and underperforming assets and to focus operations in selected profitable markets and businesses.  In the past year we have divested onshore crude pipeline systems and product pipelines in the USA, retail assets in Peru, a stake in Showa Shell in Japan, and refinery interests in Delaware in the USA, Thailand and Malaysia. Further portfolio actions have been announced for Basell.  In addition, as a result of an unsolicited approach from an interested buyer, Shell has decided to explore its strategic options with regard to its Downstream global Liquid Petroleum Gas (LPG) distribution and marketing business. Discussions are at a very preliminary stage and progress will depend on the conclusions of the review, meanwhile work that was already underway to structure LPG into a stand-alone global operation, will be accelerated.
  • Extend operational excellence through top quartile performance and reducing costs. In the USA in particular, refining performance and retail restructuring are yielding improvements.
  • Deploy capital to markets in Asia where demand is expected to grow.  By 2010, Oil Products expects to have roughly 40% of its assets, and Chemicals some 35% in the Asia Pacific/ Middle East region, where the three key markets of China, India and Indonesia are opening up.

Regaining Upstream Strength

Exploration and Production

The Exploration and Production (EP) portfolio today generates significant cash flow from core producing areas. Though the overall resource base remains significant, proved reserve life is relatively low and it is essential to convert existing resources into proved reserves and production. EP will invest in sustaining profitable core areas, in growing integrated gas positions and large-scale oil projects, and in maturing additional unconventional oil production.  New investment and business development will target areas with growth potential and exposure to price upside.

Resource base

Shell confirms the guidance previously given on the findings from the hydrocarbon resource base review completed in April 2004. Proved reserves at the end of 2003 stood at 14.4 billion barrels of oil equivalent (boe), following the restatement of 4.47 billion boe of proved reserves relative to the end of 2002.  The proved reserve replacement ratio is expected to average at least 100% for the period 2004 to 2008.  This includes the previously announced expected rematuration of some 50% of the restated reserves by the end of 2008.  Total expected producible resources are some 60 billion boe, showing no material change from the end of 2002.  It is planned that by the end of 2009, the Group will bring on stream the facilities and infrastructure that allow us to unlock some 13 billion boe of such resources.

Production
As previously announced, production in 2004 will be between 3.7 and 3.8 million boe per day, and between 3.5 and 3.8 million boe per day in 2005 and 2006.  Production is expected to grow to between 3.8 and 4.0 million boe per day in 2009.

Portfolio action
Having divested $2.4 billion from 2001-2003, EP is targeting an additional $5 billion of divestments, dilutions and swaps from 2004-2006.

Exploration
Exploration will focus on ‘big cat' wells (prospects greater than 100 million boe, Shell share), with spending levels approaching some $1.5 billion per year.  Since the beginning of 2003, the Group has had six significant discoveries in Nigeria, three in Kazakhstan, one in Egypt, one in the Gulf of Mexico and three in Malaysia.  The average unit finding cost of volumes discovered in this period is about $1.2 per barrel.  During the same time period, over 260,000 square kilometres of acreage has been acquired with the potential to deliver some 30 big cat prospects.  Looking forward, 15-20 big cat wells per year are planned.  
 

Project delivery
Project delivery will be enhanced by a simplified organisation, stronger leadership, improved controls and contract management.  Over the past two years, Athabasca Oil Sands (Canada), Bijupirá-Salema (Brazil), Na Kika (Gulf of Mexico) and EA (Nigeria) have all come on stream.  Over the next two years, Bonga (Nigeria), Salym (Western Siberia), and Holstein (Gulf of Mexico) will begin producing or be expanded.

Operational excellence and competitive costs
Upstream operations will target top quartile performance.  EP remains committed to reducing structural costs by leveraging the new EP global organisation to help offset cost pressures from inflation, exchange rates and incremental expenditure on asset integrity.

Gas & Power

Shell is the world's largest supplier of LNG and the second largest natural gas producer, with leading positions in the world's three key markets. Shell's LNG business has delivered a 13% annual increase in total sales in the years 1999-2004. Sales are expected to increase to around 10 million tonnes per annum for 2004.

Building on this strength, Gas & Power will create value by accessing and monetising new natural gas resources across the value chain by:

  • Leveraging its global portfolio, technology and capabilities;
  • Increasing access to major and emerging markets;
  • Delivering complex, integrated gas plays; and
  • Actively managing the portfolio.

Over the last five years, Shell has delivered eight LNG trains in four countries ? responsible for 20% of today's global capacity. All together, these projects have come in under budget and on or ahead of schedule.  Major projects going forward include: Nigeria LNG trains 4, 5 and 6; Sakhalin II LNG; LNG import terminals in North America; and the Pearl Gas to Liquids project in Qatar.  

Group Financial Framework

Shell sees an environment where oil prices have shifted structurally higher.  Meeting the increasing demand for hydrocarbons will require significantly more upstream investment.

With a $15 billion per year investment programme and upward pressures on price and costs, Shell plans for medium term cash neutrality at around $25 per barrel, including divestments.  The Group screens projects around $20 per barrel and tests for upside at high prices.

Funding priorities are to grow the dividend at least in line with inflation over time, to invest in existing and new business growth and to maintain a strong balance sheet with financial flexibility. If additional cash is available, we will balance further high value capital investment opportunities with returns to shareholders. Total debt ratio at the end of 2004 is expected to be around 14-15%.

In line with the strategy, capital spending levels will increase to $15 billion per year for the period 2004-2006, with $11.5 billion per year dedicated to the Upstream (Exploration and Production and Gas & Power).

Divestments of non-strategic and underperforming assets are expected to rise to $10 to $12 billion over the period 2004-2006. In 2004 we expect cash proceeds from divestments to exceed $4 billion.

Urgency and Action

Mr. Van der Veer concludes that, "We are focused on improving our competitive position, strong cash generation and total shareholder returns. Replacing our reserves is a priority to support future growth.  Operationally, we aim to deliver top quartile performance and adhere strictly to project milestones.

"Everyone at Shell understands the urgent need for performance and delivery.  This requires action and decisiveness in everything we do.   We have an invigorated and more open ‘enterprise first' culture, and I am confident of our ability to succeed."

日本経済新聞　2004/10/29

シェル　英蘭親会社を統合　経営の透明性確保狙う

　英蘭系ロイヤル・ダッチ・シェルグループは２８日、来年５月をメドに英国とオランダにある２つの親会社を統合すると発表した。１９０７年のグループ誕生以来、２親会社制を維持してきたが、今年初めから相次いだ原油などの確認埋蔵量の下方修正で主要株主の批判が強まり、経営の透明性確保などに問題がある現体制を抜本的に見直すことにした。
　同グループは新会社としてロイヤル・ダッチ・シェルを設立し、２つの親会社を実質的に吸収、本部はオランダのハーグに置く。現在の経営体制はオランダのロイヤル・ダッチ石油、英国のシェル・トランスポート・アンド・トレーディング（シェルＴＴ）という完全に独立した上場企業が６対４の割合で出資する持ち株会社を通じてグループ企業を統治していた。
　シェルは２８日、１月から通算５回目となる埋蔵量の下方修正の可能性があることを発表した。
　シェルの７−９月期は実質的な最終利益は原油高が追い風となり、前年同期比７０％増の４４億１千万ドル（約４７００億円）と好調だった。

Royal Dutch Shell plc.

N.V. Koninklijke Nederlandsche Petroleum Maatschappij ("RD")
The "Shell" Transport And Trading Company, Public Limited Company ("ST&T")

2005/6/29　日本経済新聞　

シェル株主総会　英蘭親会社統合を承認

　石油メジャーの英蘭ロイヤル・ダッチ・シェルグループは２８日、英国とオランダにある２つの親会社の株主総会をそれぞれ開き、両社の経営統合を承認した。昨年初めから保有する鉱区の原油埋蔵量の下方修正が相次ぎ、主要株主から経営の透明性確保のために経営統合を求める声が強まったことに対応した。
　グループの親会社であるオランダのロイヤル・ダッチ・ペトロリアムと英国のシェル・トランスポート・アンド・トレーディング(シェルＴＴ）がそれぞれ開いた株主総会では経営統合について、ほぼ１００%近い圧倒的な賛成を得た。来月２０日に統合を実施する予定だ。
　１９０７年のグループ誕生以来、２親会社制度を続け、ロイヤル・ダッチとシェルＴＴが６対４の比率で出資する持ち株会社を通じてグループ企業を統治してきた。
　今後、経営統合で取締役会が１つになり、迅速な意思決定が可能になる。両親会社が別々に上場してきたために難しかった株式交換による大型買収も容易になる。

　

Platts 2006/8/8

Shell Chemicals to restructure North America MEG business

Shell Chemicals plans to restructure its North American mono ethylene glycol business beginning with the mothballing of its No 1 MEG unit in Geismar, Louisiana, by the end of 2006, a company source said Tuesday. The No 1 unit can produce 90,000 mt/year of MEG and overall produces 160,000 mt/year of ethylene oxide equivalences. Shell would still have the capacity to produce a total of about 375,000 mt/year of MEG from another two units at the Geismar complex. The shutdown of the No 1 unit could allow Shell to put roughly 54,000 mt/year of ethylene to other uses. In lieu of producing the MEG, Shell would increase the purification of ethylene oxide at the site, expand its ethoxylation capability and produce more surfactants, the source said.

To make up for the lost MEG from Giesmar, Shell could move MEG from any number of its plants across the globe. "Shell's a global company," an MEG trader said, and it would be able to make up for the lost capacity in Geismar in a variety of ways. The company could, for example, decide to participate less in the spot market, the trader said.

Shell would further restructure its North American business once Shell Eastern Petroleum in Singapore, a 100% owned subsidiary of Shell Chemicals, completes its planned 750,000 mt/year MEG plant on Singapore's Bukom Island.
The plant was scheduled for completion by 2009-2010.

Shell currently exports MEG from North America to Asia, and once the Singapore plant is completed the company could, "envision an increasing percentage of Scotford MEG to go to North American customers," Shell said in a statement to its customers.

Redirecting MEG from Canada to the US would not be automatic, however, as Shell would seek out the market that would give the greatest netback.

New York Times　August 27, 1993

AMERICAN CYANAMID TO BUY SHELL CROP PROTECTION UNITS

The American Cyanamid Company announced that it has agreed to purchase Shell Petroleum Inc.'s crop protection businesses. Terms were not disclosed. The sale would make American Cyanamid, based in Wayne, N.J., the world's sixth-largest crop protection company, moving up from 10th, the company said yesterday. Shell's sales of crop protection products were approximately $700 million in 1992

New York Times　June 17, 1993

SHELL IN TALKS TO SELL ITS FARM CHEMICALS UNITS

The Royal Dutch/Shell Group said yesterday that it was in talks to sell its crop protection businesses to the American Cyanamid Company, a move that would significantly increase American Cyanmid's share of the $25 billion global farm chemicals market. Shell, the giant British-Dutch oil group, estimated that the sales for the combined chemicals businesses would be about $2 billion.

Analysts in London said that Cyanamid, based in Wayne, N.J., would have to pay $700 million to $800 million for the Shell operations. "This is a major agrochemicals deal," said John MacDougall, an analyst at Wood MacKenzie. "The enlarged American Cyanamid will be a significant threat to the leading world players." American Cyanamid is currently the world's 10th-biggest farm chemicals company, while Shell ranks 13th.

Forbes 2007/8/29

Shell And Dow Prepare $2.1 Billion Iraqi Petro Plan

Anglo-Dutch oil company Royal Dutch Shell is reportedly in talks with Dow Chemical to develop an Iraqi petrochemical plant for $2.1 billion, in a likely attempt to gain a strong foothold prior to the hoped-for opening up of the country's broken oil industry. But analysts believe the project itself has little hope of being profitable.

The plant is to be based in the southern city of Basra, and would therefore rely on the city's 120,000 barrels-a-day refinery for its feedstock. The problem, according to Global Insight energy analyst Samuel Ciszuk, is that Iraq is experiencing a refining shortage that would have a severe supply impact for any major petrochemical project.

"Unless the facility operates small-scale, it is hard to see it run on Iraqi refined products," said Ciszuk. "Of course, in the Gulf you don't need to look that far for feedstock, but it is still more expensive than sourcing it locally."

The real value of the reported project may therefore be political rather than financial. After all, the revelation that Shell and Dow Chemical were in talks over the joint venture came from Iraqi Industry Minister Fawzi Hariri, who told Reuters on Wednesday that the upgrade would help "the local market and beyond."

"The Iraqi government has repeatedly been saying that they want investments in petrochemicals," said Global Insight's Ciszuk. He added that this particular project would be a gesture of goodwill to build on, especially if it led to favorable status when Iraq's oil industry is liberalized.

A spokesperson for Shell, Alexandra Wright, confirmed the company was in talks with the Iraqi government "on a range of issues," but would not elaborate on the specific petrochemical plan. Dow Chemical declined to comment.


Although any real long-term profitability for the petrochemical project will depend on the reconstruction of Iraq's security and industrial infrastructure, the real advantage for Shell and Dow lies in getting a favorable position ahead of the passing of the country's notorious oil law. The law will be the foremost issue to address when the Iraqi parliament reconvenes in September, and companies are hoping that the plan to unlock over two-thirds of the country's reserves of 112 billion barrels will finally get approval.

　　　2006/3/29　イラクの石油化学

August 29, 2007 business.timesonline.co.uk

Shell in talks over $2.1bn Iraqi project

Iraqi Industry Minister reveals Shell is expected to team up with Dow Chemical to expand a chemical plant near Basra

Shell is in talks with the Iraqi Government about restoring and expanding a chemical plant near the city of Basra in a $2.1 billion (£1.1 billion) project, it emerged today.

Fawzi Hariri, Iraq's Industry Minister, revealed that the terms of an agreement with Shell and the US giant Dow Chemical could be concluded by the end of the year.

He told Reuters: "We are looking to upgrade this [plant], and evaluate what type of products and facilities we need for the local market and beyond."

The move is the latest sign that the world's biggest energy companies are poised to begin the long-expected rush into Iraq after months of speculation.

Earlier this month, Total and Chevron signed an agreement to work together on projects in Iraq, including plans to improve production at the giant Majnoon oil field, the fourth-biggest in Iraq.

Shell has persistently denied any suggestion that it is engaged in talks regarding any official project, instead reiterating that it only hopes to help once the political and security situation improves.

But industry experts have long claimed that the Anglo-Dutch group is drawing up development plans for Rumaila, Iraq's biggest oilfield. A spokesman was not immediately available for comment today.

A spokesman today said: "Shell has a very long history of working in Iraq. We would welcome the opportunity to help Iraq rebuild its energy industry, but we will only enter the country once security, living, and working conditions are improved.

"We are looking at opportunities from outside the country but have no comment to make on this particular project."

Iraq holds an estimated 110 billion barrels of oil, with more than half still to be developed, offering huge opportunities to Western companies desperate for new reserves.

Muhammad-Ali Zainy, a former oil official in the Iraqi Government, told The Times earlier this month: "Iraq is the last remaining frontier that offers so much potential."

2008/7/15 Shell　　　　　　　　　　　　　　　　　　　2006/6/30　バイオエタノールの状況

Shell and Iogen announce extended alliance to accelerate a next generation biofuel

Royal Dutch Shell plc and its subsidiaries (“Shell”) and Iogen Corporation today announced an extended commercial alliance to accelerate development and deployment of cellulosic ethanol.

The terms of the agreement include a significant investment by Shell in technology development with Iogen Energy Corporation, a jointly owned development company dedicated to advancing cellulosic ethanol.  The arrangement will also see Shell increasing its shareholding in Iogen Energy Corporation from 26.3% to 50%.  Shell first took an equity stake in 2002.

The collaboration with Iogen is a key part of Shell’s strategic investment and development programme in biofuels, particularly in 'next generation' biofuels using non-food feedstocks.  The fuel is made from raw materials such as wheat straw and promises to reduce CO2 production by up to 90% compared to conventional gasoline.

Iogen’s first demonstration commercial plant opened in Ottawa in 2004.  Shell is considering investing in a full-scale commercial cellulosic ethanol plant and is contributing to Iogen’s detailed feasibility and design assessment work.

Commenting on Shell’s increased investment, Dr. Graeme Sweeney, Shell Executive Vice President Future Fuels and C02 said “This is a strong statement that Shell is committed to accelerating the development of cellulosic ethanol in collaboration with Iogen.  We have come a long way together already on this particular technology pathway for sustainable biofuel and we will be working ever closer to meet the technical and commercial challenges facing larger scale production.”

“We are excited to see this expanded partnership”, said Brian Foody, Chief Executive Officer of Iogen Corporation.  “This transaction sets the stage for successful large scale cellulosic ethanol production.”

Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam and New York stock exchanges. Shell companies have operations in more than 110 countries and territories, with businesses including: oil and gas exploration; production and marketing of liquefied natural gas and gas to liquids; marketing and shipping of oil products and chemicals; and renewable energy projects including wind, solar and biofuels.
www.shell.com/aboutshell

Iogen is a leading biotechnology firm specialising in cellulosic ethanol - a fully renewable transportation fuel made from agricultural residue that can be used in today’s cars. The company has been producing cellulosic ethanol at its Ottawa demonstration plant since 2004.  Iogen also develops, manufactures and markets enzymes used to modify and improve the processing of natural fibers within the textile, animal feed and pulp and paper industries.  In operation since 1974, Iogen is a privately held company located in Ottawa, Canada.  For more information, visit www.iogen.ca - opens in a new window
 

Notes to editors