Oil 2014: Royal Dutch Shell announced a surprise choice as its new chief executive as the oil major competes for a share in Abu Dhabi's main oil concession.
Shell surprises with choice of new chief
Royal Dutch Shell announced a surprise choice as its new chief executive as the oil major competes for a share in Abu Dhabi's main oil concession.
Ben van Beurden, Shell's current head of refining, will replace Peter Voser at the start of 2014, the year in which Abu Dhabi National Oil Company hopes to renew its Adco onshore concession.
Shell is a current stakeholder in Adco, and is among the international oil companies (IOCs) in the running for a stake in the future concession.
IOCs producing in Abu Dhabi can book their share of the reserves in the fields, an important accounting feature that affects their share price.
Oil companies are pushing hard to replace their depleting reserves and lower production costs.
While Adco's reserves are bookable and its fields are exploited and at relatively low cost, the slim returns granted to IOCs under the terms of the concession goes against the industry trend of seeking high-yielding assets.
"Ben will continue to drive and further develop the strategic agenda that we have set out," said Jorma Ollila, the company chairman.
Mr van Beurden's appointment was not foreseen by many in the industry. As refining margins shrank, oil companies have reduced or shed their downstream operations in the face of low margins.
"He has more of a downstream focus, while the thrust of the company is to invest more into the upstream, and become more selective about downstream investments," said one analyst.
Mr van Beurden's expertise will help him to keep Shell abreast with another industry trend, however. Shale and other unconventional gas is accounting for an increasing share of gas resources, and will likely boost worldwide exports.
Shell already produces more gas than oil, and the technology used for gas processing is often similar to downstream technologies.
The company has built the world's largest gas-to-liquids plant in Qatar, the Pearl complex that produces refined products usually derived from oil.
Trade of liquefied natural gas will be boosted as new gas production is developed in Africa and Australia. Shell's incoming new chief has spent 10 years in the company's LNG business.
The company earlier this year made headlines for winning the Bab gas concession in Abu Dhabi, a US$10 billion deal to develop a sour gasfield in the emirate.
Sour gas is heavily laced with sulphur, necessitating complex gas processing that leans on refining technology.