Against falling oil prices, the U.S. shale oil producers have been more resilient than most anticipated, the global energy giant Royal Dutch Shell's chief executive officer said Tuesday.
'American shale oil production has so far been more resilient financially and more competitive technically than expected,' Ben van Beurden said according to a statement on Shell's website.
Speaking in the Oil and Money Conference in London, and talking about the current oil market, falling oil prices, and their future, the chief executive said 'It will take some more time to rebalance demand and supply.'
Due to the glut of supply in the market, oil prices remain at their lowest level in more than six years. The oil price slump negatively affected U.S. shale oil companies, who have high-production costs, but their output has not yet fallen significantly to trim the oversupply in the market.
Van Beurden also listed global oil demand, OPEC, and capital cost as other significant indicators that affect oil prices.
'It remains to be seen whether [OPEC's] strategy of defending market share to maximise export revenues will be successful in the longer term. But despite calls of some members, there are no signs that its leading producer Saudi Arabia will change its policy anytime soon,' he said.
Stressing that global economic growth will be weaker than expected, van Beurden said it is unclear how quickly oil price will recover and what will be their new level.
The chief executive stated that Shell is planning for a longer period of low prices. He said market fundamentals will remain unchanged as drivers of the oil market, and added that he expects global demand for energy and oil to grow in future.
- Low carbon future
Van Beurden pointed out to the rising importance of natural gas in global energy mix, and its cleaner quality compared to other fossil fuels.
'Gas is a fossil fuel, yes, but a crucial one for building a low-carbon future,' he said.
'When burnt for power, gas produces around half the CO2 and one-tenth of air pollutants that coal does. A switch from coal to gas in power plants improves air quality today and helps deliver a sustainable energy system tomorrow - together with renewables,' he explained.
Earlier this year, Shell announced it will buy the gas company BG Group for $70 billion, which is one of the largest acquisitions in the oil industry ever and the biggest this year. The acquisition is expected to provide the Anglo-Dutch energy company vast gas resources and technological know-how of BG Group.
Van Beurden also encouraged governments to put a price on carbon, and underlined that effective carbon pricing systems would boost technologies like carbon capture and storage.
'Policy-makers have an important role to play. They need to design carbon pricing systems that address concerns about cost and competitiveness,' he said.
'If we get them right, carbon pricing systems could really reinforce the transition to a low-carbon future,' he concluded.
By Ovunc Kutlu
Anadolu Agency
ovunc.kutlu@aa.com.tr