Royal Dutch Shell firmly commits to continued investment in TT

Shell’s chief executive officer (CEO), Ben van Beurden, gave this assurance yesterday during a meeting with Prime Minister Kamla Persad-Bissessar at the Diplomatic Centre, La Fantasie, St Ann’s.

Royal Dutch Shell agreed to buy BG Group Plc for $70 billion (47 billion pounds) in cash and shares, the oil and gas industry’s biggest deal in at least a decade.

Van Beurden said the transaction was a very important one for the company, one which made a lot of sense as both parties had portfolios that were complementary in liquefied natural gas (LPG).

“What we assured the Prime Minister about, was that TT will be our core focus area for the combined company going forward. We very much look forward to deepen and grow our position in this country for a number of reasons. It is because of the fundamentals, of course, of the geology, but also the fundamentals of the investment climate which we see as very consistent, very strong,” he said.

TT was van Beurden’s first stop on a world tour to meet with key governments, which he said signified the importance of the position of this country.

“It was very important for me to be here. It is also a little bit for sentimental reasons, because I was here 15 years ago when I was trying to make a light gas deal happen and, as it sometimes happens in this industry, it didn’t succeed. So, it feels that I’m making good on something that I missed out in the past.. I am very happy to do that, Prime Minister,” van Beurden said.

The CEO said Shell took into account the strong portfolio BG had around the world, adding that capabilities Shell brought in deep water and the development of LNG were very strong.

“I would like to believe that we are offering a stronger reinforced partnership that is very much to be here for many more years to come, to extend our position, and to unlock some of the difficulties,” he said.

Asked about the feasibility of the merger, van Beurden warned that if the question was asking him to where the oil price would go, he would have to disappoint as they “did not make predictions in oil prices.

“We believe in the fundamentals of the oil market, and we believe that the oil prices we are seeing at the moment, and the guess prices that go with it are not sustainable over the mid to longer term. We believe the guess prices will revert to levels significantly higher than today.

“It is from that particular belief that we do this particular move. The acquisition of BG will make sense in the wide range of oil prices, but they will start in the low 70s, so we believe fundamentally that the oil price in the mid term will go back to higher levels than they are at the moment,” van Beurden said.

The Prime Minister said as Shell was very efficient with deep water exploration and drilling, she felt they would bring added strength to TT.

During the meeting Persad-Bissessar had proposed the establishment of a joint Ministry of Energy / Ministry of Finance committee to engage BP, BG and Shell in order to examine new strategies for the LNG industry.

“I see great opportunities for us partnering with Shell both on land, deep water, anywhere there might be oil or gas, and with energy as well. So, we welcome Shell back to TT. It will be for the development of their company, but also for TT within our own region,” she said.

When asked about job security for BG’s employees, van Beurden said on a global scale, BG was a very small company in terms of staff numbers.

“Of course if there is duplication we will look for ways and means to eliminate that duplication. I imagine in many countries, and TT is no exception to it, all the capability that BG has in the country would be very much needed and very much welcomed with their portfolio. I do like to think of it much more of an opportunity to offer broader career prospects,” he said.

The CEO said the strategic value of BG in TT was a very strong energy portfolio, and a very mature deep water portfolio.

“It is something that fits very much with our investment at the time, it fits very much the places that we want to be bigger and better in,” van Beurden said.

The delegation from Shell Group of Companies included Shell Trinidad Limited Country Chairman, Luis Prado, Shell Executive Vice President, Government Relations, John Crocker, and Shell Trinidad Government Relations and Communications Advisor, Mark Regis.

Energy Minister Kevin Ramnarine, Finance Minister Larry Howai, and Trade and Industry Minister Vasant Bharath were also present.