ABC News 24 interview with Shell CEO Ben van Beurden

Title: Shell CEO Ben van Beurden interview with ABC News 24, Australia

Duration: 5:52 minutes

Description:
ABC News 24 journalist Ticky Fullerton speaks to Ben van Beurden, CEO of Royal Dutch Shell about the oil price, costs, labour flexibility and productivity, growth as well as slowing of demand as it relates to the move away from coal. They also discuss Shell’s combination with BG Group.

Shell CEO Ben van Beurden interview with ABC News 24, Australia Transcript

[Title]

Presenter of The Business, ABC News 24

[Elysse Morgan]
Global energy giants have been brutally cut down to size by the collapse in the oil price but since February, the low of $26USD a barrel, prices have risen 50%, with the recovery of energy stocks a key market theme. The world is still awash with oil though but with a key OPEC meeting this weekend in Doha, hope springs that some kind of deal can finally be done to curb production. Ticky Fullerton spoke to Shell’s Global CEO, Ben van Beurden, in Perth

[Video footage]
Mid-shot of Elysse Morgan, seated at a news desk. Behind her, a screen depicts an oil drilling vessel on the ocean with text displaying towards lower frame-right of the screen. In the lower corner at frame-right, a News 24 logo appears which remains throughout the following interview.

[Text displays]
Big Oil
The Business
Interview with Ben van Beurden

[Title]
Journalist, ABC News 24

[Ticky Fullerton]
Ben van Beurden, it’s good to talk to you again.

[Title]
CEO, Royal Dutch Shell
[Ben van Beurden]
Good to see you, Ticky.

[Video footage]
Close-up of Ben van Beurden, seated in a fairly dim indoors environment.

[Ticky Fullerton]
Can I ask first about the oil price? We’ve got this OPEC meeting coming up, we’ve got the sanctions lifted in Iran, is there any hope to this over-supply problem we’ve got?

[Video footage]
Close-up Ticky, seated in the same dim indoors environment.

[Ben van Beurden]
Well, to be perfectly honest, I don't know what’s going to happen in the short term, it’s very, very difficult to really sort of understand how all the factors currently playing in the oil market are going to add up and are going to play out. If you take a look at the fundamentals, the fundamentals will probably point to a balancing of the market happening a bit later, probably, therefore, a recovery of the oil price from the levels that we are seeing at the moment.

[Video footage]
Close-up of Ben van Beurden, as previously described. Text briefly displays along the bottom of the frame.

[Text displays]
Ben van Beurden
CEO, Royal Dutch Shell plc

[Ticky Fullerton]
But tough times going forward in the short term?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
…but tough times will remain not only because it may well be that we are seeing this level of price for some time to come, or even lower, but probably also because you will see a new normal but a lot more volatility than we are used to and that is probably the harder challenge for us to come to grips with.

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Ticky Fullerton]
You talked about cost today and the importance of getting on top of cost, particularly in terms of becoming more competitive against coal. How can that happen?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
Yeah, but first of all, the cost story is a very important one…

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Ticky Fullerton]
Because you’re at the higher end of the cost curve, aren’t you, in the industry?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
…well, if you talk about Shell, or gas, probably not so much but fundamentally the story is as follows, you know, the world is going to need more energy, it will therefore need to invest in energy probably to the tune of a trillion dollars or more every year, so therefore prices and cost levels will settle to a point that that investment is going to be forthcoming.

The ones who are going to win in that type of industry are the ones who are advantaged from a cost perspective; you get advantage by sitting on top of the best acreage, the best positions and by being able to do projects exceptionally well.

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Ticky Fullerton]
Now, how much of that is to do with fundamental things like labour flexibility in Australia, is that, for example, an area of concern?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
Yeah, it is a key area that we need to get right.

Indeed, productivity, it is a key area that we have to get complexity of projects done, it is something that we as an industry can provide a lot of self-help to ourselves, by working more on standardisation of designs, by working on simpler designs but also making sure that we focus on productivity, not only in designing and engineering but also in construction.

And that is indeed an area that, you could argue, is important for Australia but, as a matter of fact, it is important in many other countries as well.

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Ticky Fullerton]
The demand side is also an issue. I think, in the shorter term, demand growth from China, for LNG, is now slowing and I’m wondering why the LNG industry globally hasn’t done a better job of convincing the world that it is the transition product to move faster towards and away from coal?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
Well, Ticky, it’s not only the transition product, it is, in my mind, also the destination fuel for the future.

Have we done a good enough job? No, probably not but, at the same time, also bear in mind that gas is growing twice as fast as oil and, within gas, LNG is, again, growing twice as fast as gas and that is not by coincidence, that is because of the fundamentals of gas being better than the fundamentals of oil, when it comes to climate change, when it comes to the convenience, the flexibility, when it comes to being a great partner for renewables, etc., but can we do more? Absolutely.

Can we do more to make sure that, indeed, gas enjoys a level playing field, the benefits of gas are better understood? Also, absolutely. Can we do more to make sure that gas is truly competitive? Also, absolutely. So there is a lot of things that we need to work on as an industry as well and it’s not just advocacy.

[Video footage]
Close-up of Ben van Beurden, as previously described. Text briefly displays along the bottom of the frame.

[Text displays]
Ben van Beurden
CEO, Royal Dutch Shell plc

[Ticky Fullerton]
Moody’s has downgraded the Shell Group yesterday, I think. Now, partly that’s digesting BG, some would ask, is it the right thing to do, to be taking over BG at a time like this?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
Well, I guess it was the only time we could do it. So I’m very, very pleased and happy that we were ready this time around. We had been looking at BG for so many times for so many years and we always found that we were not quite there or not quite ready to do it and this time we were.

This time, when the economic circumstances lined up for us to take advantage of, we were financially ready, we were ready also from a mind-set to do this, we had priorities for where we needed to be and BG, by the way, had done a fantastic job of really making sure the company was as attractive as it could be for a company like us, the fit was absolutely perfect.

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Ticky Fullerton]
You’ve had a month, presumably, looking at BG, are there areas… I mean, where are the cost savings going to come, are they going to come more from the Shell side or more from the BG side after your weekend together?

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
Well, indeed, we are in the process of opening up the box and, of course, you see all sorts of things that you expected, you see some positives and some negatives. I would say, by and large, it is what we thought we would get.

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Ticky Fullerton]
Ben van Beurden, it’s always very good to talk to you. Thank you very much, sir.

[Video footage]
Close-up Ticky, as previously described.

[Ben van Beurden]
Thank you, Ticky.

[Video footage]
Close-up of Ben van Beurden, as previously described.

[Text displays]
© ABC 2016
Licensed to Royal Dutch Shell
For display on company website, intranet and pages on youtube.com until the 14th April 2017.