Maarten Wetselaar

The low oil price is having a significant impact throughout the world. In this speech, Maarten Wetselaar argues that oil and gas companies and governments must look at the implications of the oil price on their balance sheets and economies in the short term, while also keeping an eye firmly fixed on the long term. This will help them survive the current price environment and come out stronger on the other side.

Ladies and gentlemen, good morning.

The impact of the low oil price continues to be significant and far-reaching. Over the past year, we’ve witnessed a large transfer of wealth from producing to consuming countries.

Producing countries are feeling the pain, as low prices impact state finances. And countries which consume oil are feeling the gain, thanks to an increase in spending by consumers who are saving money at the petrol pumps. The oil and gas industry has also been affected.

Over the next few minutes, I’ll give my take on steps oil and gas companies and governments should take with the oil price sitting where it is.


But first some context. As we know from experience, the oil and gas industry is cyclical in nature.

This means it’s not good enough for oil and gas companies and governments to be solely fixated on today’s oil price.

Just as the politicians in the room have a responsibility for the long-term wellbeing of their constituents, companies have a long-term duty to their shareholders and their customers.

Whenever I reflect on the importance of a balanced approach during cycles, I’m reminded of Friedrich Nietzsche’s phrase: “That which does not kill us makes us stronger.”

By dealing with the short-term while not losing sight of the long term, companies and governments will survive the low price. And they’ll come out stronger on the other side. 

In the short-term, governments need to react decisively to the impact of the low price on their respective economies.

But as you all know, governments mustn’t only concentrate on what’s going on today. They also need to focus on the future.

Multiple energy sources – from oil to gas to renewables – will be needed to address long-term energy-related priorities. Governments must look closely at what sources of energy best match their needs.

Here in Europe, for example, energy security, economic competitiveness and emissions reductions are key priorities. These priorities aren’t mutually exclusive. Governments don’t have to favour one over the other.

Natural gas is a solution to all of these challenges.

Europe sits within easy reach of many natural gas suppliers, including the largest source of low cost natural gas in the world in Russia.

It can benefit from significant new supplies of liquefied natural gas, which can be shipped at short notice, then turned back to gas and piped to homes, businesses and industries.


So what should companies do in the here and now?

The low oil price presents a great opportunity for oil and gas companies to boost the resilience of their businesses. This should put them in a good position for when supply and demand fundamentals reassert themselves, prompting the price to go back up.

At Shell, we’re strengthening the competitiveness of projects which are under construction and up-and-running. The aim is to have our break-even point at the bottom of the oil price cycle.

Long-term planning

We’re focused on the long term; investing in our business for a time when the market fundamentals of supply and demand look different than today.

We reduced operating and capital costs by more than $12 billion last year. And we delivered capital investments at around $29 billion, which is a decrease of more than 20% compared to 2014.

We’ve also forged ahead with the largest acquisition in the energy industry for many years.

Buying the British oil and gas company, BG Group, will not only increase our cash flow. It will also boost our production, and our proved oil and gas reserves.


Time to draw to a close.

The low oil price is having a massive impact on countries and companies all over the world.

Whether you work for a government or business, and whether you live in Europe or Asia, the same fundamental point stands: we’re living through a cycle. Shell has witnessed many such cycles over the past century. And there are, no doubt, more to come this century.

Businesses and governments need to look at the implications of the oil price on their balance sheets and economies in the short term. They also need to keep an eye firmly fixed on the long term.

That’s the only way growing demand for energy will be met in the years and decades to come.

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