Shell seeks to boost LNG demand to build new plants

By Perry Williams, Dan Murtaugh and Yvonne Man on 9/6/2017

SINGAPORE and SEOUL (Bloomberg) -- Europe’s biggest energy company is investing in projects to boost global gas demand and aims to continue feeding the market it’s nurturing with new liquefied natural gas export plants.

Royal Dutch Shell Plc is supporting the development of gas use in heavy transport such as shipping and is also helping smaller and less credit worthy customers begin importing LNG, Maarten Wetselaar, the company’s director of integrated gas and new energies, said at an event at Bloomberg’s Sydney office Wednesday. As new LNG customers enter the market, that will open a window for Shell and others to develop new low-cost export plants.

“I want to create shorts that we can build projects against,” Wetselaar said. “As we develop the market, we’ll need new supply. We will build new LNG projects to serve that market, but as for where, I would be wrong to tell you.”

Shell has potential LNG projects in nearly every time zone in the world, and the ones that can produce the cheapest fuel will get the investment go-ahead, Wetselaar said. LNG Canada, a project Shell delayed an investment decision on last year, is among the options, he said later in an interview with Bloomberg Television.

Those projects that can’t meet the low-cost requirement may not be part of Shell’s future, Wetselaar said.

“We have projects in Asia, Africa, in the U.S. and in Canada, and one thing for sure is that we can’t build them all at the same time,” he said. “We will need to sequence and potentially sell parts of these projects down as we move forward.”

Wetselaar also said that Shell’s 13% stake in Australian producer Woodside Petroleum Ltd. isn’t a long-term part of Shell’s portfolio, although the company is “not in a hurry to monetize it.”

Shell executives, including CEO Ben van Beurden, have spent the past few years remaking Europe’s biggest oil company into a natural gas giant amid the global drive to lower carbon emissions.

Gas purchase

First came the $52-billion acquisition of BG Group Plc last year, which added gas deposits from Kazakhstan to Australia. In March, it sold Canadian oil sands acreage to Canadian Natural Resources Ltd. for $7.25 billion, ridding itself of 1.7 Bbbl of crude reserves. The company had 6.26 Bbbl of oil and other liquids and about 6.99 billion of gas reserves at the end of 2016, according to its most recent annual report.

As well as accelerating the transition to gas, Van Beurden has advocated a price on carbon and worked to promote hydrogen as a transport fuel.

“A combination of gas and renewable energies is the future that we are betting on,” Wetselaar said Wednesday.

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