Shell is currently engaged in developing one of the world’s largest gas to liquid fields through its US$20bn Pearl project just off the Qatari coast in the Arabian Gulf and has achieved some notable closed loop contracts for its new fuel, which it claims dramatically reduces CO2 and NOX emissions. Qatar Airways has even demonstrated the potential of gas to liquid technology by operating a revenue service from London to Doha. Shell EVP global commercial Mark Gainsborough outlined some of the company’s thinking – including the vital lubricants sector – at yesterday’s [14 February] media briefing in the company’s huge Amsterdam complex.
j-a: To what extent is gas proving to be a commodity that is easily sourced?
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MG: “We are producing more and more gas at Shell in the mix – we produce around 3% of the world’s gas – it is proving to be much more abundant than originally thought. We get accused of making tremendously high profits, but only a tiny amount comes from refining oil into motorists’ tanks. We put a lot of money into our Pearl project [US$20bn] – we spend around US$1bn a year on research and development which is the largest R&D programme of the oil companies.”
j-a: Would it not be better for Shell to completely split its up and down-stream elements?
MG: “The key to success is the integration between the upstream and downstream. If we did not have the downstream piece to add to the upstream piece, with the Pearl project, I doubt we would have done it.”
j-a: To what extent do lubricants form a key element of Shell’s business?
MG: “We view fuels and lubricants very much as core technologies for Shell. We do a lot of work to back up what we claim and to make sure it is not some sort of marketing flim-flam. Shell is the largest manufacturer of lubricants around the world [with] 13% of the global market. We see very strong growth in emerging economies such as Brazil, India and China – our challenge has been to keep up with the growth in those emerging markets.”
j-a: How do you back up your lubricant division in terms of support?
MG: “We have a very strong technical capability – we have more than 300 technical staff around the world. In terms of feet on the street, we have more folk than our competitors.”
j-a: To what extent does Shell work with OEMs when it comes to getting approval for new technology such as lubricants?
MG: “Working with partners is incredibly important. We recently did a big product rationalisation initiative, which meant we had to get 8,000 approvals around the world. It is not only about getting approvals [however] – but what is going to be the OEMs’ vehicles/engines [requirements] in the coming years. Our relationship with the OEMs is close enough that it is a co-engineering project. Just last week we signed a joint-venture with Hyundai to work on a manufacturing plant in South Korea.”
j-a: Why has Shell invested so much time – and money – in the gas to liquid (GTL) area?
MG: “The energy business is strongly growing. The demand people have for mobility and better living standards is huge. The challenge we have is to provide energy the planet can cope with. We think gas has a big role to play in that solution.
“Whichever way we cut it [either] electric vehicles, hybrid, even with those things, we still think there is a need for liquid fuels during the next 20-30 years.
“US$20bn in Qatar is the largest ever investment made by Shell – it is a very exciting time for us. The Pearl project is an amazing piece of kit, a staggering endeavour. This is not like bringing out the next generation mobile phone.”
