Brent Crude at $80 a barrel is not an “unreasonable” price of oil, and it will support investment in oil and gas infrastructure after the downturn, Shell’s chief executive Ben van Beurden told CNBC in an interview on Tuesday.
“We should be able to balance the market at that sort of oil price level, but of course bringing on new production is not a short-term event,” van Beurden said, noting that it takes years for the industry to bring new production online.
The top executive at Shell said that the oil market is “a little bit tight,” adding that he thinks the industry needs “slightly elevated prices to bring new supply on, which is going to be the main challenge.”
Shell has been working to reduce the cost of its offshore projects, its chief executive told CNBC. The company is building a portfolio of projects that can break even at $40 per barrel, he noted.
Earlier this year, Shell, a major player in the U.S. Gulf of Mexico, said that it had started early production at a deepwater subsea development in the U.S. Gulf of Mexico a year ahead of schedule and at a forward-looking, break-even price of less than $30 per barrel of oil.
Just before that announcement, Shell made a large deepwater exploration discovery in the U.S. Gulf of Mexico, just 13 miles from its Appomattox project that is expected to start production by the end of 2019.
Referring to the U.S. tariffs and quotas on steel imports, Shell’s van Beurden told CNBC that the tariffs and quotas are affecting Shell in some of the construction projects in the United States.
“We are being affected, but not to the point that it makes us change our mind on investments,” van Beurden said.
By Tsvetana Paraskova for Oilprice.com
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