13th Dec 2005 07:30
Shell announces 2006 capital investment programmeRoyal Dutch Shell announced today a capital investment programme for 2006 ofaround $19 billion in support of its strategy of more upstream and profitabledownstream. Planned 2006 Upstream investment is around $15 billion, includingapproximately $2 billion for Exploration and excluding the minority share ofSakhalin. Downstream investment is planned at over $4 billion.Jeroen van der Veer, Chief Executive for Royal Dutch Shell said, "We have asubstantial pipeline of projects for development. The increase in investmentwill grow and mature our resource base, increase production, build on ourstrong position in integrated gas and unconventionals and enhance our leadingposition in the Downstream. Global energy needs depend on the industry'sability to sustain high levels of investment as the search for energy leads usto increasingly challenging and technically demanding environments."Highlights of the 2006 programme include: * $10-$11 billion in Upstream growth projects * 55% of the increase in Upstream investment relative to 2005 targeted to development and ramp up of new projects and increase in exploration. * 20% of the increase in Upstream investment relative to 2005 to the development and redevelopment of existing fields. UpstreamThe 2006 capital investment contributes to bringing on stream facilities thatare expected to unlock 13 billion barrel of oil equivalent (boe) of resourcesby end 2009 and mature 5 billion boe of resources to final investment decisionby end 2009.Major projects at various stages of maturation include: * Existing oil and material new oil: Salym, Bonga, Ehra, Kashagan, Deimos and Great White * Integrated gas: Qatar LNG and Pearl GTL, Nigeria LNG, Ormen Lange, and exploration, production and LNG activities in Libya, Sakhalin and Australia. * Unconventionals: Athabasca Oil Sands expansion. Development costs for typical major Upstream projects are in the range $4-$8per boe on a total resource basis (excluding LNG and GTL facilities costs).These metrics and related risks may vary significantly across differentgeographies, projects and operations.The majority of the Upstream capital investment, some $10-$11 billion, will bededicated to growth projects, defined as projects not yet on stream andincluding Sakhalin and the Athabasca expansion. This includes approximately $2billion in Gas & Power predominantly in LNG and approximately $2 billion forexploration. The remainder of the $15 billion for Upstream, some $4-5 billion,will be invested in ongoing field development and redevelopment, assetintegrity and other activities.Of the increase in Upstream capital investment in 2006 relative to 2005approximately 55% is attributed to initiation and/or ramp up in theconstruction and development phase of new projects and to increasedexploration. Some 20% of this increase is for investment in the development andredevelopment of existing Upstream assets. An estimated 25% of the increase isdue to price inflation, exchange rates and increase in service costs, such asdrilling rig rates.DownstreamThe Downstream continues to focus on operational excellence, integrationopportunities between Oil Products and Chemicals and expanding in growthmarkets for its main lines of business - Manufacturing, Supply andDistribution, Retail, Business to Business, Lubricants and Chemicals. Capitalinvestment is distributed between attractive growth opportunities and cleanfuels (combined around $1.7 billion), alternative energy, technologyinfrastructure opportunities, capitalised turnaround activity and basemaintenance of core assets.Jeroen van der Veer said, "We will continue to exercise strict discipline toprioritise our projects for investment and assure appropriate resources,technology and project management capabilities are applied. We add to ourinvestment in long lived, low decline, high plateau Upstream projects whichwill profitably contribute to the world energy needs. With strong operationalperformance and high prices we generate significant cash, enabling high levelsof investment in these organic growth opportunities while returning cash toshareholders via dividends and buy backs. We expect to continue with our closedperiod buy back programme in January and will provide an update on our 2006 buyback programme with the full year results announcement in February."Enquiries:MediaUK/USA/International: +44 20 7934 2914 / 2713 / 4323 / 3453 / 3277Netherlands: +31 70 377 8750Institutional InvestorsUK: Gerard Paulides +44 20 7934 6287Europe: Bart van der Steenstraten +31 70 377 3996USA: Harold Hatchett +1 212 218 3112This announcement contains forward-looking statements that are subject to riskfactors associated with the oil, gas, power, chemicals and renewablesbusinesses. It is believed that the expectations reflected in these statementsare reasonable, but may be affected by a variety of variables which could causeactual results, trends or reserves replacement to differ materially, including,but not limited to: price fluctuations and crude oil, natural gas and refinedproducts, changes in demand for Shell Group's products, currency fluctuations,drilling and production results, reserve estimates, loss of market, industrycompetition, environmental risks, physical risks, risks associated with theidentification of suitable potential acquisition properties and targets and thesuccessful negotiation and consummation of transactions, the risk of doingbusiness in developing countries and countries subject to internationalsanctions, legislative, fiscal and regulatory developments including potentiallitigation and regulatory effects arising from recategorisation of reserves,economic and financial market conditions in various countries and regions,political risks, project delay or advancement, approvals and cost estimates.Please refer to the Annual Report on Form 20-F for the year ended December 31,2004 (as amended) for a description of certain important factors, risks anduncertainties that may affect the Shell Group's businesses. Neither Royal DutchShell plc nor any member of the Shell Group undertakes any obligation topublicly update or revise any of these forward-looking statements, whether toreflect new information, future events or other information.Cautionary Note to US Investors:The United States Securities and Exchange Commission (`SEC') permits oil andgas companies, in their filings with the SEC, to disclose only proved reservesthat a company has demonstrated by actual production or conclusive formationtests to be economically and legally producible under existing economic andoperating conditions. We use certain terms in this presentation, such as"expected producible resources" and "amount of reserves we expect to produce",that the SEC's guidelines strictly prohibit us from including in filings withthe SEC.ENDROYAL DUTCH SHELL PLCRelated Shares:
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