Shell says current high oil prices unsustainable in long run

Oil giant Royal Dutch Shell says the current high oil prices will not be sustainable in the long run.
Its chief executive Jeroen van der Veer says the oil industry is already assessing future projects at lower oil prices. He is in Singapore to attend Shell's board meeting, the first time such a meeting is held outside of Europe. Mr van der Veer says Shell is also on track to build a new multi-billion dollar chemical cracker in Singapore.

Shell has over $ 6 bn worth of oil refining and petrochemical plants in Singapore. Its first oil refinery here is also the group's largest in the world. Now, Shell wants to expand its operations in Singapore, with the building a new chemical cracker that's capable of producing one mm tons of ethylene each year.
Mr van der Veer said: "Our vision is the combination of a refinery and a chemical cracker. It is a strong combination, stronger than to have the refinery or cracker isolated. So with the combination, you can have all kinds of advantages."

The oil giant says it will make a final investment decision next year, after detailed studies are completed. But it doesn't expect rising oil prices and the cost of materials to affect its plans for the new cracker.
He said: "At this moment, most people in the oil industry, including Shell, we look at projects at the lower oil prices than they are today because it is hard to imagine that oil price will stay as high as they are today forever."

Shell believes there is enough oil on the ground for decades to come. So it is now up to oil companies and oil-producing countries to invest more in the exploration of oil and gas.
On its part, Shell has raised its spending on such activities from $ 1 bn to $ 1.8 bn a year. In fact, Shell says it is surprised that the demand for oil hasn't dropped much in spite of higher oil prices. It thinks there could be a time delay in consumer reactions.

So in the near term, Shell doesn't expect oil prices to retreat.
Shell believes Singapore will be able to maintain its status as the region's oil and gas hub, despite rising competition from China. But it says Singapore should have more diversity of supply, such as having access to liquefied natural gas.