Shell CEO: Oil Price Will Continue Long-Term Rise

Natural resources such as oil and gas will continue their long-term price rise, according to the chief executive of Royal Dutch Shell, one of the world’s biggest oil companies.

“It’s getting more difficult to get resources out of the ground,” Peter Voser, chief executive of Shell, told CNBC. “We need a lot of technology and innovation, and it’s also more expensive, so you will see energy prices rising.”

He sees inflation of around 2 percent routinely in years to come.

Part of the reason for the fluctuating oil price has been the turbulence shaking society and politics in the Middle East and North Africa.

Voser believes that the OECD has met the shortfall from reduced Libya oil production sufficiently.

“In years to come, these countries will want GDP growth and that’s where companies like Shell can see opportunities and help them to develop industries and jobs,” he said.

The uncertainty over U.S. debt talks is not good for business in the country, he believes. “We must have clarity and not uncertainty in the stock markets,” he said. “In the energy business, the short-term impact is not that much as we plan for 20-30 years, but if other companies are starting to slow down, then we are looking at a more volatile oil price.”

Shell]reported a profit of $8 billion for the second quarter on Thursday, a 77 percent rise from the same period in 2010, as oil prices rocketed.

Net capital investment was $6 billion in the quarter as Shell spent more on finding new sources of oil and gas.

Its cash flow from operating activities during the quarter was up by 24 percent to $10 billion.

This contrasts with rival BP’s relatively weak results, as it struggled with the fallout from the Deepwater Horizon accident. Fellow oil giant Exxon will report its results later on Thursday.

Voser added that future growth at the oil giant would come from expanding production. Shell brought three new projects on stream in the first half of 2011, which are already delivering 170,000 barrels of oil per day, with the potential to rise to 400,000.

There has been talk in the markets that some of the oil majors, such as BP, may spin out parts of their business. Shell is committed to staying in its current integrated form, according to Voser.
He added that while some costs were increasing, others were shrinking as the economy was “not firing on all cylinders.”

CNBC