Shell CEO throws weight behind Government’s 'dash for gas’

RELATED QUOTES

SymbolPriceChange
RDSB.L2,406.62+6.62
NXG.BE80.680.00
USEG4.29-0.03
JJE19.5899+0.0099

The chief executive of Royal Dutch Shell has backed the Government’s “dash for gas”, saying that the fossil fuel is abundantly available, environmentally friendly and will provide energy for the next 250 years.

Peter Voser said gas was a fuel for the future and that Shell (LSE: RDSB.L - news) would be investing $20bn (£12.6bn) in the sector between 2012 and 2015.

“We see very strong gas growth,” Mr Voser said in an interview with The Sunday Telegraph .

“It is really driven by availability, there is some 250 years of gas resources available against current demand. It is acceptable from a CO2 footprint [point of view], producing 50pc to 70pc less CO2 than coal for example, and it is affordable currently and in the longer term.”

Next (Berlin: NXG.BE - news) week the Government is expected to announce its gas strategy, which will propose the building of 20 new gas-fired power stations in the UK.

Gas power stations are seen as a flexible alternative to controversial renewable energy which is often unavailable during cold spells because of a lack of wind or sunshine.

“From a total energy point of view we see this as the right step forward,” Mr Voser said when asked about the Government’s proposals.

He warned, though, that Europe (Chicago Options: ^REURUSD - news) could fall behind America and China in the development of unconventional gas.

Last week, the International Energy Agency said the US could become a net exporter of oil and gas by 2017 as it had discovered major reserves of shale gas.

“My concern is that around Europe the gas demand is growing so fast that Europe might be left behind,” he said.

He also revealed that he would be willing to look at possible tie-ups in the newly discovered east African gas fields after a $1.2bn bid to buy Cove Energy (NYSEArca: JJE - news) failed.

“We will continue to look for other options or we will develop the options we have already,” he said.

The Italian energy company, ENI (EUREX: E1NT.EX - news) , and the US energy (NasdaqCM: USEG - news) company, Anadarko, have already invested in the area.

“If I look at the ENI and the Anadarko venture, what is missing is someone with the capability of building a total infrastructure for LNG [liquefied natural gas] including the downstream, the selling part, and therefore I think that’s what both consortiums have realised,” Mr Voser said.

Asked if Shell could play that role, he answered: “We could offer that. But I don’t lose sleep by not being there. If the price is right I will maybe consider it.”

Although committed to some renewables, Mr Voser made it clear that the focus of the business was on fossil fuels. He said that policymakers should not try to push renewable energy before the technology had time to develop.

Subsidies for renewables would also have to reduce.

“I don’t believe in any business model that has to rely on subsidies,” he said.

“If you take a gas plant plus carbon capture and storage you get to a CO2 avoidance price which is much better than renewables today.”