OBG talks to Peter Voser, Global CEO, Shell

Interview: Peter Voser

Given shifting energy demand, how do you foresee the relationship between international and national oil companies evolving in the future?

PETER VOSER: Global energy demand is set to double in the first half of this century. This will be driven by a rising global population, which has just reached 7bn and is set to jump to over 9bn by 2050, and by strong growth in emerging economies, as is already being seen by rising disposable incomes in the Middle East. And with higher living standards comes rising energy use as people purchase their first luxury electronic goods.

To produce hydrocarbons efficiently and responsibly, value-driven partnerships between national oil companies (NOC) and international oil companies (IOC) are key. It is vital therefore to utilise accessible tools to keep pace with demand. In the Middle East region, a combination of rocketing demand, a shifting global energy footprint and an increasing reliance on complex resources is creating significant challenges for the industry. With the right projects and partnerships, IOCs and NOCs can leverage each other’s strengths to bring customers and resources together.

How important are joint ventures (JVs) in developing downstream industries?

VOSER: An “open door” approach attracts more foreign direct investment into the energy sector. This allows the transfer of expertise, the building up of local resource and supply-chain capacities, and the generation of strong economic growth for host nations. This is true for partnerships across the energy value chain, from downstream to upstream projects. JVs are the norm in Saudi Arabia’s downstream industries. Shell already has several long-lasting partnerships with local players, including Saudi Basic Industries Corporation at the Saudi Arabia Petrochemical Company in Jubail, in addition to Saudi Aramco, which began with the Saudi Aramco Shell Refinery Company JV in Jubail. This integrated model has been key for supporting downstream expansion and a future shaped by evolving energy uses.

What is your assessment of efforts to enhance natural gas fields and the commercial viability of developing “unconventional gas”, particularly shale gas?

VOSER: We believe that IOCs have a clear role to play in bringing their expertise from global operations to deliver the latest technologies to help meet a country’s demand. Accessing shale or tight gas reserves would have been impossible through conventional production techniques. IOCs can add technical experience in some aspects of gas development. But whether IOCs could help mitigate the Kingdom’s gas shortage is a judgment for the Saudi Arabian government to make. What is clear is that the more gas the Kingdom can use to create electric power, the more oil is freed up for exports, helping the country meet its growth agenda.

How does Saudi Arabia compare to other oil economies with respect to local research and development (R&D), and can it lead the way in the future?

VOSER: Notable efforts have been made in the education sector, especially with regards to R&D. This reflects a clear aspiration for the Kingdom, and Shell is supporting Saudi Arabia’s Vision 2020 through active R&D collaboration with local universities.

We have also recently achieved a milestone of training more than 5000 young people as part of our “Intilaaqah” programme in the Kingdom following its launch in 2010. Intilaaqah is a localised version of our global enterprise development scheme to encourage and support young aspiring people aged between 16 and 30 to start their own business.

Saudi Arabia has been at the forefront of the global energy industry since the late 1930s. Over the years, progression in hydrocarbons development has energised and strengthened local R&D institutes to global standards. The Kingdom is continuing to lay down the foundations for exporting knowledge and expertise in the near future. With the world’s largest proven hydrocarbons reserves, many of the next generation’s technology breakthroughs will undoubtedly take place here.