By Anthony DiPaola and Fred Pals
Nov. 3 (Bloomberg) -- Royal Dutch Shell Plc, Europe's largest oil company, signed a memorandum of understanding with Abu Dhabi that may lead to deep-offshore natural-gas exploration.
It's too early to estimate potential reserves, Shell's Head of Exploration Malcolm Brinded said today in an interview in Abu Dhabi. The Hague-based Shell will evaluate potential joint exploration, development and production.
``Shell hopes to move forward rapidly with final agreements in order to quickly begin joint exploration and development activities,'' the company said in an e-mailed statement today.
Shell plans to counter lost production in Nigeria and Russia by mining Canadian oil sands and a Qatari gas-to-liquids venture. The company's production has declined over the past five years and fell below 3 million barrels of oil equivalent a day for the first time in more than a decade in the third quarter. Shell forecasts annual production growth of 2 percent to 3 percent from 2010.
Shell has earmarked between $35 billion to $36 billion in spending for this year and the company has said it remains committed to ``long-term'' projects despite the financial crisis and lower oil prices. Investment decisions will be based on local costs and labor availability as well as the oil price.
Brinded said the company will ``keep investing through the cycle'' and ``expect projects that have been decided on to go ahead.''
Shell Output
Shell's output in Abu Dhabi in 2007 averaged 146,000 barrels of oil equivalent a day, making it the second-largest centre of production for Shell in the Middle East after Oman where it produced 191,000 barrels of oil equivalent a day, according to the company's figures.
Shell has a 9.5 percent stake in the Abu Dhabi Company for Onshore Oil operation, or ADCO, and also has a 15 percent shareholding in Abu Dhabi Gas Industries Ltd, or GASCO, which produces four million tons a year of liquefied natural gas, according to Shell's Web site.
When asked about Shell's existing investment plans, Brinded said ``we'll look carefully at the pace of projects'' and ``expect projects that have been decided on to go ahead.''
To contact the reporters on this story: Anthony DiPaola in Abu Dhabi, through the London newsroom at adipaola@bloomberg.netFred Pals in Amsterdam at fpals@bloomberg.net
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