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Shell chief says oil exploration worth it at $50 a barrel

Daily Telegraph

Shell chief executive Jeroen van der Veer said the oil giant would still invest in new projects with oil at $50 a barrel, as long as governments do not burden the industry with higher taxes. 

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“I can produce, provided I do not have too high taxation and royalties,” Mr van der Veer said. “That is in the hands of the government.”

Oil executives have previously said oil prices must be at or above $80 a barrel to make it worth their while investing in new oil production.

Brent crude was trading at $51.25 barrel on Thursday, down $1.12up but still far below the record highs of $147 a barrel over the summer. Fears of a protracted global economic slowdown have driven down prices on the expectation of falling demand.

The International Energy Agency cut its forecast for global oil demand by the most in 12 years on Thursday, reducing its estimate for 2009 by 670,000 barrels a day, or 0.8pc.

Oil-producing cartel Opec has already cut production from its summer highs and may meet later this month to discuss how to halt the decline in prices.

Mr van der Veer also said Shell is “very much interested” in bidding for Iraqi oil contracts, which he expects to be distributed next year. The Anglo-Dutch company is in talks with several other producers about forming a consortium, he said.

Shell last month agreed a multi-billion dollar deal with Iraq to capture gas that would otherwise be burned off during oil production. The future of the agreement depends on safety guarantees for its staff, Mr van der Veer said.

Investment in oil sands projects is at risk because of the falling price of crude, Mr van der Veer said. The projects are the most expensive way of producing oil at the moment, he said, and Shell delayed a decision on expanding its Canadian oil sands business in October.


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