By ALEXIS FLYNN
LONDON -- Royal Dutch Shell believes rising natural gas
demand will underpin its future profits, even though oil
pricing still accounts for 80% of its margins, its CEO Peter
Voser said Tuesday.
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 US and Australia.
US gas prices have fallen to decade-lows as new production
techniques have resulted in a glut of supply from shale rock
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.
However "margins are driven 80% by the oil side," he said,
referring to Shell's ability to transform gas into more
valuable fuel products like diesel that sell at prices linked
more closely to crude.
The company, the world's largest shipper of liquefied natural
gas, is also 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
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 was good.
"We will drive an integrated philosophy because that is
where the future growth will lie," said Voser, who was
addressing Shell's annual shareholder meeting.
Dow Jones Newswires