Dr. P.V. Viswanath

 

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Shell Will Ramp Up Investment In Russia and Asia to $8 Billion
 
 

By CHIP CUMMINS
Staff Reporter of THE WALL STREET JOURNAL

LONDON -- Royal Dutch/Shell Group, the Anglo-Dutch oil company, is expected to ramp up investment in Russia and Central Asia to about $8 billion by 2008, in an effort to turn the region into one of several "heart lands" of its global upstream portfolio.

In an interview, Walter van de Vijver, Shell's chief executive for exploration and production, said Russian investment will grow rapidly from current spending so far this year estimated at $1.5 billion. The spending increase will position Russia and central Asia as one of Shell's core geographic regions, eventually representing about a fifth of the company's portfolio, Mr. Van de Vijver said. Shell's other core areas include regions such as North America, northwest Europe and Nigeria.

This year Shell unveiled plans for a number of large projects in the region. In May, it said a Shell consortium would invest $10 billion in oil and gas projects on the far-eastern Russian island of Sakhalin. Early in September, Shell said it would spend $1 billion developing a long-stalled oil-field project in Siberia. It also recently increased its presence in oil-rich Kazakhstan, boosting its cut of a production-sharing agreement in the Kashagan field there and buying up increased interest in other fields and a pipeline project in the region.

The $8 billion investment estimate for 2008 includes existing projects only. Mr. Van de Vijver said there was room for potential new projects and acquisitions in Russia and central Asia. "Clearly, that might not be the end of it all," he said. "We hope that will be the first step."

Shell's activity in Russia coincides with frenetic interest this year by other major oil companies. BP PLC invested about $7.7 billion in a joint venture with Russian producer TNK International, a deal it made earlier this month. U.S. majors, including Exxon Mobil Corp. and ChevronTexaco Corp., are also thought to be interested in Russian assets including a stake in Russia's Yukos-Sibneft, which will be the country's largest oil producer after the expected merger later this year of OAO Yukos and OAO Sibneft.