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Shell cuts growth forecast
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September 19, 2001: 2:55 p.m. ET
Anglo-Dutch oil company cuts target to 3 percent as supplies decline in U.S., UK
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LONDON (CNN) - Europe's biggest oil company, Royal Dutch/Shell, has cut its forecast for oil and gas production growth as supplies in the UK and U.S. decline.
The Anglo-Dutch giant said on Wednesday its expects growth to average three percent a year up to 2005, from five percent previously.
Shell's target looks sluggish compared to its rivals, who expect growth of five percent or more.
BP, the world's third-largest publicly traded oil company, said last month it was on track to meet its own growth targets this year. It had previously said it aimed to raise oil and gas output by 5.5 percent to seven percent a year.
Investors are placing increasing emphasis on growth in production, as recent industry-wide efforts to cut costs and falling crude prices have narrowed the scope for further profit increases from these sources.
"This forecast has been lowered from our earlier targets partly as a result of slower access than anticipated to major sources of revenues," Walter Van de Vijver, chief executive of Shell's exploration and production business, said.
"In addition, some projects are taking longer to realize than first predicted, and some of our mature fields, in the UK and USA particularly, are declining faster than before," Van de Vijver said.
Shell shares fall after forecast downgraded
Shares in Shell Transport & Trading (SHEL), which owns 40 percent of Royal Dutch/Shell, dropped 2.3 percent to 497 pence in London, while Royal Dutch slipped 3.6 percent to  53.65 in Amsterdam.
Van der Vijver said production in 2001 "was likely to meet the target of 3.8 million barrels of oil equivalent per day at $14 per barrel Brent, benefiting from the recent start up of projects in the Gulf of Mexico and the Philippines."
While analysts had expected a cut to between three and four percent, there are questions about the quality of Shell's oil and gas reserves – which until now had been seen as some of the best in the industry.
"We assumed the production profile was based on reserves already in the portfolio, so we wonder if access to reserves is the real problem," Steve Turner at Commerzbank told Reuters. He said he is considering switching into BP and French rival Totalfina Elf.
According to Reuters, Van de Vijver told a presentation for analysts in The Hague that the content of the presentation "does not reflect the tragic events in the United States last week," adding: "It is too soon to speculate on the consequences for the global economy, the oil industry and the Shell group. All we can say is that we face a more uncertain world." 
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