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Shell won't exit refining

Interview with Peter Voser, Chief Executive Officer, Royal Dutch Shell plc, as published in the Wall Street Journal on September 22, 2011.

Royal Dutch Shell PLC's chief executive says he has no plans to follow in the footsteps of rivals and shed refineries.

"We will remain an integrated oil company," Peter Voser, head of the Anglo-Dutch oil giant, said Wednesday in an interview with The Wall Street Journal.

Several so-called integrated oil companies, which explore for oil and refine crude, have lately concluded they would be better off split into separate parts.

ConocoPhillips said in July that it is dividing itself into two publicly traded companies, one for each side of the business. That follows a similar move Marathon Oil Corp. made this summer when it created publicly traded Marathon Petroleum Corp. to run its refineries. Meanwhile, Murphy Oil Corp. has sold all of its refineries except for one in Wales, which it is actively shopping.

But Mr. Voser said Shell values its refineries as part of its overall business. Owning refineries, he said, should give the company an advantage in developing its Canadian oil sands, the thick crude that requires intense refining, and in its efforts to turn North America's abundant natural gas into fuel for vehicles.

If a company is only involved in one part of the oil-and-gas business, he said, "you have the risk that others will optimize the value chain."

Mr. Voser said that having refining capabilities also gives Shell an advantage when courting government-owned oil companies, which typically have access to vast reserves but little capability to get oil and gas out of the ground or to turn them into marketable products.

"For us to be the right partner to national oil companies, we have to be integrated," he said.

Separately, when asked Wednesday about market rumors that Shell was targeting gas producer Range Resources Corp. for an acquisition, Mr. Voser said "We don't comment on rumor, but we've got plenty on our table to deliver."

Range's operations are increasingly focused on the Marcellus Shale in Pennsylvania and New York, a deeply buried rock formation that has quickly become one of the most prolific natural-gas fields in the world.

Mr. Voser said Shell has some 40 trillion cubic feet of so-called unconventional natural-gas reserves, such as gas from shale, in the U.S. and Canada, some of it acquired when the company bought East Resources last year for $4.7 billion. Shell intends to focus on developing those reserves with an eye toward projects that turn natural gas into a liquid transportation fuel, exporting liquefied natural gas and chemical manufacturing, he said.

A spokesman for Range Resources didn't respond to a request for comment”

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