We are sticking with our business strategy: More Upstream, Profitable Downstream.
OUR OIL AND GAS RESOURCES
% of total resources on-stream or under construction,
March 2009
MORE UPSTREAM
More upstream means concentrating the bulk of our investment in oil and natural gas production, where returns are typically higher than in the downstream. In 2009, we again expect around 80% of our capital investment to be in upstream projects (including oil sands). Cleaner-burning natural gas will be an increasingly important part of our upstream portfolio, and could grow from 45% of our production in 2008 to more than half in 2012. We expect production from oil sands to grow as well, though more slowly than we had anticipated due to sharp increases in construction costs for new projects (see Unconventional oil). We invest in large, integrated projects that will produce oil and gas for decades and will benefit both the countries holding these resources and countries dependent on oil and gas imports. These giant projects take a long time and a lot of money to build. They cannot be stopped or started quickly in response to short-term changes in energy prices or costs.
Competition for access to oil and natural gas resources will remain intense. We believe we can differentiate ourselves through our technology, our operational excellence and our ability to manage these complex and difficult projects in socially and environmentally responsible ways.
PROFITABLE DOWNSTREAM
Profitable downstream means focusing on generating cash from our existing Oil Products and Chemicals assets and continuing to adjust our downstream portfolio so we can contribute to growth in emerging markets. Helping our customers with advanced fuels and lubricants, building our capacity in carbon capture and storage, and working to develop a substantial transport biofuels business are also part of this strategy.
SOURCES OF DIFFERENTIATION
As energy projects become more complex and more technically demanding, we believe our technical expertise will be a deciding factor in the growth of our business. So will our Shell brand and our ability to deliver operational excellence. We also recognise that our ability to deliver our strategy heavily depends on operating safely, reducing the environmental footprint of our operations and products, and building strong relationships, based on trust and mutual benefit, in the places where we operate.