Royal Dutch Shell Group plans to invest $1.7 billion a year in its upstream oil and gas business in Europe in the next three to five years, said Kieron McFadyen, technical director of Shell's European E&P unit. He added that this is from a base program of $1.5 billion and could rise to $1.9 billion a year.

He emphasized Shell's recent organizational changes, which integrated its oil and gas business across Europe, and said that collaboration within the organization and with other companies will be essential to capitalize on remaining North Sea assets. The upstream reorganization benefits the company by connecting technical expertise with every area of its business.

The director also said he didn't know what the implications would be of any further organizational change, such as that proposed recently by company shareholders. He added that the benefits of the latest changes are only just beginning to be felt. Key investors have called for changes to the Anglo-Dutch company's corporate structure in the wake of its 20% overstatement of proven oil reserves, reported on Jan. 9. Among the changes sought by the shareholders are the establishment of a unified board and an independent chairman and chief executive.

McFayden said Shell's oil production in Europe is expected to remain flat for the next three to five years with gas production rising slightly.

(02/17/04)