The world’s second-largest petro-major gave us a rare look inside its corporate head this week. With top management pulling back the veil on which global oil and gas plays they see as the future.
That company is Shell. The oil giant held a major press conference Tuesday, announcing its priorities in exploration and development for the coming years.
And the results might surprise many observers.
Overall, Shell said it is paring back its operations. Planning to completely exit 10 different countries (although it didn’t specify which ones) — by selling a portfolio of projects that makes up about 10 percent of the company’s total production.
So, where will the major be focusing going forward? Management was very clear — naming just a handful of plays as areas of concentration for the medium- to long-term.
One of those is deepwater offshore development. With Shell saying that Brazil and the U.S. Gulf of Mexico are a particular focus in this sector.
Management also noted that U.S. shale and associated petrochemicals developments will be a priority. With the company adding that they see petrochemicals in China as another key growth area.
One of the most interesting points to emerge is that Shell also sees shale potential in a completely different part of the world: Argentina. The management specifically named this country as a long-term priority. Related: After 350,000 Layoffs Oil Companies Now Face Worker Shortages
That’s a big vote of confidence for the rapidly-emerging Argentina shale oil and gas sector, especially coming on the heels of major investment announcements from groups like ExxonMobil.
The focus on the Gulf of Mexico is also a surprise for Shell. Given this is often seen as a mature producing area.
But the continued investment here is a testimony to regulatory strength. With the GOM still being one of the best tax regimes globally for oil and gas production — and having a clear and well-established permitting and operating environment.
It thus appears that Shell is in some ways going back to basics — while picking a few spots like Argentina as the “next big thing”. Watch for announcements on specific project investments in all of these parts of the world.
Here’s to zeroing in,
By Dave Forest
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