Shell's vision of a gas-fired future

One of the most senior executives in Shell was in Dubai this week for the annual meeting of the Middle East country chairman. Jeroen van der Veer, a 55-year old no-nonsense Dutchman, is president of Royal Dutch Petroleum and vice-chairman of the managing directors' committee of the Shell group. He spoke to journalists after concluding the two-day executive summit.

'The 19th century was about coal, the 20th century about oil and the fuel of the 21st century will be gas,' he said, adding that the $25 billion Saudi Gas Initiative was 'not dead' as some press reports had suggested.

'Oil demand is only growing at two per cent a year,' he noted. 'But it is my view that gas, and most especially gas-to-liquids has enormous potential to deliver new markets and customers to Middle East producers.

'The global energy market of tomorrow will be very different to that of the 1990s. We believe that the global trend towards cleaner fuel and advances in technology provides the Middle East with a major opportunity to realise its global gas potential'.

He said that the Saudi Gas Initiative was the 'culmination of long years of work together with Saudi Arabia, and a stepping stone to many further developments'. Shell's Saudi Arabian country chairman Floris Ansingh added that there was 'great hope' for a breakthrough on the SGI in the coming weeks or months.

Apart from the SGI, Shell holds 30% of Oman LNG, and is a partner in ADCO and Gasco with Abu Dhabi National Oil Company. Shell is also developing a natural gas distribution network in Egypt, and is exploring for gas offshore.

'We are also active in Jordan, Yemen and of course Iran,' he said. 'Increasingly we see links between the energy economies of many countries in the region. And as these economies grow, gas infrastructure is going to develop throughout the region.'

Mr. Van der Veer stressed Shell's long term commitment to the region. Presently the oil giant has 8,000 staff in 17 countries and produces 1.3m bpd and trades a further 2.2m bpd. As such it is the largest private oil and gas producer outside the USA.

'These are uncertain times,' he said. 'And hardly a day goes by without newspaper headlines highlighting concerns about the security situation within the region. We would like to see a lasting and peaceful solution to the current tensions in the Middle East. But we are not politicians and look to the international community to take the lead in what actions, if any, should be taken'.

In response to journalist's questions Mr. Van der Veer declined to speculate on oil price movements, and said his job was to prepare Shell for any eventuality. However, he did note that the Opec oil price band of $22 to $28 per barrel had been in place for a long time.

On the situation in Iraq the Shell vice-chairman refused to speculate on whether a regime change would be advantageous for the western oil industry. He pointed out that nobody knew the true current production capacity in Iraq, and again said it was Shell's job to be prepared for all eventualities.