Shell CEO says rising natural gas demand will boost profits
(Dow Jones; May 22) - Royal Dutch Shell believes rising natural gas demand will underpin its future profits, even though oil pricing still accounts for 80 percent of its margins, Chief Executive Peter Voser told shareholders May 22. The oil giant, which expects to produce more natural gas than crude oil for the first time this year, has invested heavily in gas assets in the U.S. and Australia.
However, U.S. gas prices have fallen to decade-lows as new production techniques have resulted in a glut of supply from shale rock sources. But despite this the long-term pricing outlook for natural gas remains strong, said Voser, as Asian-Pacific customers are increasingly switching from powering their industrial plants with oil to gas. The company, the world's largest shipper of liquefied natural gas, is able to benefit from the difference in regional gas prices.
Voser also said Shell remains committed to the fully integrated operating model, where a single oil company extracts, transports, refines and sells hydrocarbon products. While some analysts have argued that major oil companies like Shell should sell off their refining businesses to better realize high commodity prices, Voser said the long-term outlook for the model is good.