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Shell's (NYSE: RDS.A) Natural Gas Investments

Brian Hicks

Written By Brian Hicks

Posted November 20, 2012

Royal Dutch Shell (NYSE: RDS.A) is getting into natural gas in a big way, it seems. The company, Europe’s biggest oil concern, will be investing more than $20 billion that it has set aside for natural gas projects through 2015.

From the Buffalo News:

“Our integrated-gas earnings have more than trebled in the last five years, reaching $9 billion over the last year,” Chief Executive Officer Peter Voser said Sunday. “We see growth opportunities to invest over $20 billion here for 2012-15.”

Demand for natural gas has been rising meteorically over in Asia as India and China begin to see seismic shifts in their society. And fracking-led natural gas production in the West is simply booming.

For Shell, post-Fukushima demand for liquefied natural gas has meant a 2.3 percent gain in Q3 profits.

After currently-developing Australian projects are complete, Shell projects LNG outputs will increase nearly 30 percent (that means new figures of roughly 29 million metric tons/year). Moreover, Shell hopes to run trucks and ships off LNG and is looking into projects that might consume up to 5 million tons of LNG per year.

So far in 2012, Shell has made $6 billion in acquisitions, but the company expects to see cash flow from all operations rise by 50 percent through 2015 since it has developing projects in Qatar and Canada.

Mozambique has piqued Shell’s interest, too. Last week, the oil giant mentioned that it is investigating the possibility of getting into gas projects in that country with Anadarko Petroleum Corp. (NYSE: APC), Eni SpA (NYSE: E), and other companies.

Mozambique could harbor up to 250 trillion cubic feet of gas, according to Empresa Nacional de Hidrocarbonetos, the Buffalo News reports. That’d make Mozambique a candidate for the third largest LNG producer, following Australia and Qatar, within a decade. No wonder Shell’s so interested.

Finally, Shell expects demand for LNG to increase by fourfold to the neighborhood of 400 million tons/year by 2020.

The company is gearing up for that by considering adding more than 20 million tons of yearly LNG capacity to facilities in Australia, Indonesia, and North America.

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