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Shell boss hopes Saudi tensions will not hit supply

Shell CEO Ben van Beurden

The head of oil giant Royal Dutch Shell has warned that the crisis over the disappearance of Saudi journalist Jamal Khashoggi should not be allowed to shake the security of energy supply.

Ben van Beurden told Sky News that he was “glued” to coverage of the case and not just because it “may lead to geopolitical tensions that may affect markets”.

He said disruption to the sector would be “an unhelpful outcome” for all concerned.

Shell, the biggest company by value on London’s FTSE 100 Index, has investments of more than $8bn and 2,000 staff in oil-rich Saudi Arabia.

The kingdom is under intense international pressure following the disappearance of Mr Khashoggi, who worked for the Washington Post, after he entered Istanbul’s Saudi consulate.

Mr van Beurden told Sky’s Ian King: “We follow this closely and not just because this may lead to further geopolitical tensions that may affect the markets.

“Developments like this are developments that keep everybody glued to their phones.

“Let’s hope that these things will clear themselves up, we understand what really happened there, and that indeed nothing happens to the security of supply in the energy system.

“That would be a very unhelpful outcome for everybody concerned.”

Saudi Arabia, the world’s top oil producer, plays a dominant role in setting global agreements on supply intended to stabilise the price of the commodity.

Brent crude has been trading at four-year highs of more than $80 a barrel recently, a level which Mr van Beurden described as “not an unreasonable price”.

Should Saudi Arabia decide to squeeze supply it could push the price up while opening the taps could send it lower.

A sharp surge in the price might be thought to favour the likes of Shell – a company whose investment decisions and earnings are closely tied to the state of the market.

But Mr van Beurden said: “A rapid rise in prices is not good for anybody.

“It could bring inflationary pressures, it will also bring potentially shocks or difficulties to the economic system.

“Nobody is served by that, also not companies like us.

“We like a stable environment, a stable oil price, so we can plan our cash flows in a sensible way, and so we can also plan our capacity, our resources, our people in a sensible way.”

SOURCE

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