Shell chief executive Peter Voser outlined a new agenda for profitability and growth for the oil giant yesterday after posting a surge in annual profits to £18billion.
He also warned about the negative impact of government tax changes on investment in the industry.
The Shell boss expects cash flow to increase 50% between 2012 and 2015 compared with 2008-11 as new projects make their mark.
He also said the multinational was aiming to increase production by 25% by 2018.
Mr Voser said Shell would be looking to spend about £20billion in 2012, 80% of which would be in exploration and production, with 35% of it on exploration.
However, Mr Voser said tax changes, such as last year’s tax increase by the UK Government on oil and gas producers, had dented investment. “If you take the last 10 to 15 years, as soon as there are tax changes which reduce your opportunities to invest, because the profitability is no longer there or no longer as strong as it is, investments come down,” he said.
“Therefore I think there needs to be a win-win situation with the right incentives to invest for the longer term.”
He said 60% of the firm’s planned spend would be in Australia and North America but some large projects were under way in Shell’s “traditional heartlands”.
“We are investing huge sums of money in the North Sea in projects like Clair Phase 2 (in which Shell owns 28%) and Schiehallion (36%),” Mr Voser said. “This means good revenues for gov-ernment and job creation and is an important part of maintaining Shell’s cash flows from these profitable and long-life basins.”
Despite a 54% increase in full-year profits to £18billion – based on a current cost of supplies (CCS) measure – the firm’s fourth-quarter results disappointed investors.
Shell said it had been hit by a downturn in the global refinery business and lower North American natural gas prices in the fourth quarter.
Full-year revenues were £296billion, up from £232billion in 2010.
Shell recently angered unions when it scrapped its final-salary pension scheme for new recruits, meaning that not a single employer in the FTSE 100 Index offers the retirement package.
Unite general secretary Len McCluskey said yesterday: “The company is needlessly closing its final-salary scheme, while posting colossal profits.”
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