:00:02. > :00:10.income by 2015. He said both the wealthy and those on welfare had to
:00:10. > :00:13.share in tackling the deficit. Now it's time for HARDtalk.
:00:13. > :00:19.The United States is about to become the world's largest producer
:00:19. > :00:25.of oil and gas. Quite remarkable for a country that only a few years
:00:25. > :00:29.ago was the world's largest importer of gas. It's a turnaround
:00:29. > :00:39.made possible by shale and it comes at a time of rapidly increasing
:00:39. > :00:39.
:00:39. > :00:42.demand from China, India and the Middle East. My guest today, Peter
:00:42. > :00:50.Voser, is the boss of Royal Dutch Shell one of the biggest energy
:00:51. > :01:00.companies in the world. With economies so thirsty for power,
:01:00. > :01:10.producers are being driven to new frontiers - but at what cost?
:01:10. > :01:11.
:01:11. > :01:16.Peter Voser, welcome to HARDtalk. Thank you for having me. That first
:01:16. > :01:24.from countries, there is a demand that you are a struggling to
:01:24. > :01:30.satisfy? Absolutely correct. Demand is rising much faster driven by the
:01:30. > :01:36.world's population growth. Driven by countries coming out of more
:01:36. > :01:40.energy poor environments into richer environments. We are
:01:41. > :01:47.struggling to provide the right supply. That gives a certain
:01:48. > :01:55.volatility to the pricing. I would say over the years to come, supply
:01:55. > :02:01.will always slightly behind the demand growth in the world. There
:02:01. > :02:11.is talk of global energy demand doubling by 2050. A massive
:02:11. > :02:14.
:02:14. > :02:22.increase. The world will go from 7 billion-9 billion people. People
:02:22. > :02:27.are going through the most intensive energy face. Energy
:02:27. > :02:33.efficiency is built into that. We cannot say that today. The demand
:02:33. > :02:39.could rise faster if we do not get the energy efficiency right. With
:02:39. > :02:45.the United States, one of the remarkable discoveries and so
:02:45. > :02:49.prices given what had been expected, is the boom in shale gas. How
:02:49. > :02:54.important will that be for the future energy needs? I will call it
:02:54. > :02:59.a revolution. It has transformed the whole Gas situation. You have
:02:59. > :03:06.seen tremendous gas growth across the world, specifically in the
:03:07. > :03:12.United States. 100 years of gas available against current
:03:12. > :03:18.consumption. There is huge growth possible. This would drive
:03:18. > :03:24.industrialisation, it would drive a conversion from coal to gas. -- it
:03:24. > :03:34.well. It will bring manufacturing petrochemicals back to the United
:03:34. > :03:34.
:03:34. > :03:39.States. It can drive the economy on this gas. We will talk about its
:03:39. > :03:45.comparisons in a moment. You are literally saying, it will mean that
:03:45. > :03:53.what? A growth in factories, a repatriation of manufacturing back
:03:53. > :03:58.to the US? Yes, in my opinion in a big style. What we produce in my
:03:58. > :04:04.industry, it can be used in very heavy Industries, in petrochemicals.
:04:04. > :04:11.This would generate jobs. The government will embrace this in the
:04:11. > :04:16.longer term to bring jobs back. They have outsourced and put them
:04:16. > :04:25.offshore over decades. It will be cheaper to produce a plastic toy in
:04:25. > :04:31.America than in China? Yes. It will replace imports from the Middle
:04:31. > :04:35.East. You'll see this growing to the detriment of Europe's
:04:35. > :04:42.manufacturing base, or other parts of the world. The US have something
:04:42. > :04:45.in their hands, it is not just gas, they have low tide of oil. It will
:04:45. > :04:53.help them to drive the re- industrialisation of the Midwest in
:04:53. > :04:59.the US. If you have a US that is self-sufficient, I can meet its own
:04:59. > :05:08.energy demands, what does that mean for the way that it treats the
:05:08. > :05:13.Middle East? In geopolitical terms does it change its politics? Does
:05:13. > :05:21.it change the way the world works? You have to look at this from two
:05:21. > :05:24.sides. The growth in demand is 90% outside the OECD it over the next
:05:24. > :05:32.few years. Producers will be looking to those countries that
:05:32. > :05:41.will buy in the future. That 90% growth is India and China, two-
:05:41. > :05:51.thirds of FIFA stop the Middle East is already moving towards a shove.
:05:51. > :05:53.
:05:53. > :06:01.-- of it. The same from the US. -- Asia. What I am wondering, what
:06:01. > :06:11.does it mean for their politics? As a result of conflict or politics,
:06:11. > :06:17.it has alliances there, everyone says it is because of oil, is that
:06:17. > :06:22.going to change? I think they will still have an interest. They will
:06:22. > :06:29.want more stability of energy for emerging markets. You do not want
:06:29. > :06:35.these emerging markets, China and India, being held back by very
:06:35. > :06:38.volatile and high prices of energy because of geopolitical issues in
:06:38. > :06:44.the Middle East. There is still an interest from the US. They will
:06:44. > :06:48.also look at these emerging markets from a political point of view.
:06:48. > :06:58.the moment the US is investing heavily in protecting the version
:06:58. > :07:00.
:07:00. > :07:04.golf. Making sure the Straits of Hormuz will not be shut. If you do
:07:04. > :07:10.not need to do that anymore, you have got money freed up elsewhere,
:07:10. > :07:16.you can move the US from a volatile part of the world. We have to
:07:16. > :07:22.understand how you can build a energy system in the US. It will
:07:22. > :07:27.take them 20-30 years to get there. Very long time frames. That is a
:07:27. > :07:31.challenge we all have. In our industry and in politics, we have
:07:31. > :07:38.ticket going on our energy system while at the same time building one
:07:38. > :07:43.with less carbon dioxide for the future. The ramifications are
:07:43. > :07:50.beyond your industry. Absolutely. That is quite clear. Let's talk
:07:50. > :07:55.about shale. You say it is a win- win. Other people say there are all
:07:55. > :08:02.sorts of problems. Let's begin with the environmental one. The process
:08:02. > :08:06.by which you get shale gas out of the ground, fracking, it is
:08:06. > :08:12.blasting water and chemicals into rock as I understand it to get the
:08:12. > :08:17.gas out. It is hugely polluting, isn't it? A limited amount of
:08:17. > :08:22.research has been done. Compared to coal, the footprint of shale gas is
:08:22. > :08:32.at least 20% greater and more than twice as great on the 20-year
:08:32. > :08:38.
:08:38. > :08:44.horizon. That is the course of the methane. -- because. I think
:08:44. > :08:49.fracking has been done for the last 60-70 years, it can be done in the
:08:49. > :08:55.right way. It needs the right technologies. It needs the right
:08:55. > :09:02.footprint in terms of how much land you actually use. What chemicals
:09:02. > :09:06.you use. How you build the holes etc. It can be done. It needs
:09:06. > :09:12.regulations that are the same for all of us. That is what we are
:09:12. > :09:21.pushing at the moment. To lift up the standards we are using. What is
:09:21. > :09:30.your assessment of how it compares with other gas or coal? In bulletin
:09:30. > :09:34.terms. Invalid in terms against coal, 50-70% less CO2. The
:09:34. > :09:39.chemicals you are using on the fracking site, they are all
:09:39. > :09:44.biodegradable. You can do this in an environmentally sound way. The
:09:44. > :09:50.methane can be measured and captured. The methane can be
:09:50. > :09:56.captured? Yes. The technologies are around. They have to be applied and
:09:56. > :10:02.forced to do so. That is what we are driving out. Against coal there
:10:02. > :10:06.is no question. The world has gas in its hands. It can achieve a lot
:10:06. > :10:11.of climate change goals by switching from coal to gas. We have
:10:11. > :10:16.to accept that for the wider society, this is still a fossil
:10:16. > :10:22.fuel. The International Energy Agency have said it is still in its
:10:22. > :10:27.formative years, there are concerns about its environmental impact. It
:10:27. > :10:33.could stop the revolution in its tracks. I agree on that. This has
:10:33. > :10:39.come very fast. Event the industry was surprised with how quickly we
:10:39. > :10:43.found these resources. The dialogue has been done in a very fast way.
:10:43. > :10:48.We need to continue that to give the conference to the energy users
:10:48. > :10:54.and also the government. The way it is doing things at the moment is
:10:54. > :11:01.not good enough? Let me put it this way, having larger companies like
:11:01. > :11:05.Royal Dutch Shell, with long-term review on developing these
:11:05. > :11:10.resources coming into these places, does help to lift the standards.
:11:10. > :11:16.That is what we should go. We should have a discussion that is
:11:16. > :11:25.not driven by emotions, but by fax. That is why I'm criticising Europe,
:11:25. > :11:29.it is done on emotions. There are too many unknowns. I would not say
:11:29. > :11:33.there are not many unknowns. We have been doing this since the 30s.
:11:33. > :11:41.We have not spoken about the possibility of it polluting
:11:41. > :11:45.groundwater. Let's cover that one. Groundwater is very high up. We go
:11:45. > :11:51.down to 4,000 metres. The issue is how you drove through the
:11:51. > :11:56.groundwater. If you do your cementing the right way, there is
:11:56. > :12:03.no ground water pollution. You can a chamois ground water pollution
:12:03. > :12:08.over the last six years. -- cannot show me. The fact that there were
:12:08. > :12:13.two earthquakes in Blackpool, in a country that does not have
:12:13. > :12:21.earthquakes, that is the UK being emotional? There are seismic
:12:21. > :12:25.activities, that is correct. It is like a bus pass in your house. --
:12:26. > :12:33.passing. The dialogue between industry and society and government
:12:33. > :12:39.about what this entails and what are the risk. There is no energy
:12:39. > :12:44.form that does not have risk. The dialogue needs to happen. One of
:12:44. > :12:50.the things that has happened as a result of the boom in shale gas, in
:12:50. > :12:57.the US prices are down to $2 a unit. So much cheaper than elsewhere in
:12:57. > :13:04.the world. Europe and Asia. Hence, this competitive advantage we are
:13:04. > :13:14.talking about. It the rails any investment in renewables. Do you
:13:14. > :13:15.
:13:15. > :13:23.accept that? -- derails. The answer is no. In the long-term the world
:13:23. > :13:26.will need to deliver and develop all energy forms. Gas and
:13:26. > :13:33.renewables are complementary. Renewables will not produce all the
:13:33. > :13:38.time. Does it mean more subsidies for renewables? I do not believe in
:13:38. > :13:42.business models that live on subsidies. What about environ
:13:43. > :13:52.mental models? Over time we have to face the fact that energy prices go
:13:53. > :13:54.
:13:54. > :13:59.up. I am for that, not because we make profit, but you cannot make
:13:59. > :14:04.sure it against current prices. Current prices are competitive
:14:04. > :14:09.because they are fossil fuel based. The world has a lot of them. If we
:14:09. > :14:14.want new energy forms, we have to put it into research and
:14:15. > :14:24.development. We have to accept that prices go up. That is not an easy
:14:24. > :14:30.It seems a bizarre argument. We have concerns that we know about as
:14:30. > :14:34.a result of fossil fuels that will not be sold, no matter what you do.
:14:35. > :14:40.You are saying there should not be subsidies? That is not what I am
:14:40. > :14:45.saying. You don't believe in the business model? In the long term, I
:14:45. > :14:53.don't believe in that. Six times as much subsidy for fossil fuels.
:14:53. > :14:58.Europe, you pay 60-70 % tax. There are a lot of other things. Let's
:14:58. > :15:02.put things in the right perspective. Emerging countries are subsidised.
:15:03. > :15:11.I think they should stop that. It helps to stop demand rising too
:15:11. > :15:18.much. I think some countries are moving there. On our side, I think
:15:18. > :15:22.they'd to declare. And -- we need to be clear. If an individual wants
:15:22. > :15:28.to choose the energy system, they choose a price for the energy
:15:28. > :15:33.system. Coming back to the subsidy question, to build a business model,
:15:33. > :15:41.there have been subsidies in some parts of the industry. You cannot
:15:41. > :15:48.always be on that. We talk about new frontiers. Shell is involved in
:15:48. > :15:52.a pristine wilderness of a new frontier, the Arctic. You have
:15:52. > :15:57.spent $4.5 billion in seven years trying to find a way to safely get
:15:57. > :16:01.oil out of the Arctic. You have not been successful and you have closed
:16:01. > :16:06.down for the winter again. Is there a point are you believe it cannot
:16:06. > :16:14.be done safely? We would not say that. We think it can be done
:16:14. > :16:21.safely. We are in the exploration phase. Naturally, you closed down
:16:22. > :16:28.during the winter. There is no rush. We are building a complete new oral
:16:28. > :16:34.response system. -- oil response. We are trying to refurbish rigs. We
:16:34. > :16:38.are taking time to put this together. In order to develop a
:16:38. > :16:43.long-term operation model for the Artic, it takes time. Having said
:16:43. > :16:51.that, for the last few decades, all of the wells have been drilled.
:16:51. > :16:56.This is not new. And we are putting everything into making sure that we
:16:56. > :17:01.apply the highest global standards. That is the problem with it. You
:17:01. > :17:05.have this pristine wilderness, as we are talking about. The risks are
:17:05. > :17:10.inordinately high. There are particular concerns and the Artic
:17:10. > :17:14.because there is a short window of summer months where you can operate.
:17:14. > :17:18.The audit committee that looked at this came to the conclusion that
:17:18. > :17:22.there should be a ban on anything until a suitable regime is in place.
:17:22. > :17:28.The chair of the committee said that companies should come clean
:17:28. > :17:37.and make -- admit it will be difficult to deal then I'll spell
:17:37. > :17:43.in the Arctic. The infrastructure is not in place. There will be your
:17:43. > :17:48.round operations. When I see you only thrill in the summer, that is
:17:48. > :17:54.just for exploration. In the developed and scenario, you build.
:17:54. > :18:00.We are operating already in the Arctic. We have a big gas field an
:18:00. > :18:05.oil field in the Arctic. It is -- in order to develop this type of
:18:05. > :18:14.system, you need to have the experience. That is what we have
:18:14. > :18:20.been gaining for a 30-40 years. We are applying it in Alaska. Why is
:18:20. > :18:24.it that a rival of years, Total, the chief executive has said that
:18:24. > :18:30.pulling out of oil, or oil and grain land would be a disaster. A
:18:30. > :18:34.league would do too much damage to the company. I think you will have
:18:34. > :18:39.to as Christophe. I asked him about that. I think he will give you a
:18:39. > :18:47.different story. I think that is not the issue. I think it can be
:18:47. > :18:55.done in the Safeway. Other companies like Chevron, they are
:18:55. > :19:00.working together. This is important. The industry works together for all
:19:00. > :19:05.responsibility during the seasons. You need to do that. One of the
:19:05. > :19:13.concerns, it was raised by the committee, if you have this Bill, a
:19:13. > :19:19.blood just before the winter, it could be spewing out for six months.
:19:19. > :19:29.-- If you have a spill, a blow-out. We have never had that. Technically
:19:29. > :19:31.
:19:31. > :19:35.that. That is what I am going to say. You cannot compare the Gulf of
:19:35. > :19:40.Mexico to Alaska. The Gulf of Mexico is high-pressure with light
:19:40. > :19:45.oil that comes out. You're in deep water. You are in shallow water and
:19:45. > :19:51.it is not high pressure. One needs to take a view on each area that
:19:51. > :19:58.you are in Alaska. You cannot just compare it to this accident which
:19:58. > :20:03.happened in the Gulf of Mexico. The logical basis is completely
:20:03. > :20:11.different. You need to be very careful that you do not jump from
:20:11. > :20:15.one to the other. They may not be compatible. This is a question for
:20:15. > :20:21.your company. You need people to when
:20:21. > :20:26.when they go wrong. When you look at the situation in Nigeria, Shell
:20:26. > :20:33.has had a huge investment with the Government they're over a long time.
:20:33. > :20:38.It also has a troubled history with the clean-up. With the UN, at the
:20:38. > :20:45.request of the Medellin government, they carried out of the board. --
:20:45. > :20:50.Nigerian. 10 out of 15 sides that were meant to have been made safe,
:20:50. > :20:54.and I know she'll have accepted this, but there are still ongoing
:20:54. > :21:02.and shoes concerns about the fact that you have not sorted the mess
:21:02. > :21:06.out. The method was made by leaks. If you look at Nigeria, there are a
:21:06. > :21:12.lot of opportunities. There is a lot of oil and gas which needs to
:21:12. > :21:18.be developed. In that area, we have clearly said that we accept the
:21:19. > :21:27.report. The leadership of the Government is important. You need
:21:27. > :21:33.access to these sides in a Safeway. Unfortunately, access is very
:21:33. > :21:40.difficult for security reasons. We have ongoing theft and stealing of
:21:40. > :21:46.crude which damages the environment even mor even mor very
:21:46. > :21:55.difficult for Oz to go in there and clean the sub. Should you be there
:21:55. > :22:00.in the first place? One man says that crude oil has infiltrated the
:22:00. > :22:04.water and the food. If you cannot clean it up, should you be a?
:22:04. > :22:09.are not a company which walks away. We are a company that wants to do
:22:09. > :22:13.things right. We're clearly in a situation where we cannot do it
:22:13. > :22:21.alone, Winnie's stakeholders and you need the Government to help us
:22:21. > :22:26.to get access. -- we need. We are providing a lot of committees with
:22:26. > :22:32.drinking water which we truck in every day. We are prepared to do
:22:32. > :22:36.these things. I cannot take the risk and allow people in if it is
:22:36. > :22:40.not safe enough. I have said this many times to the government of
:22:40. > :22:48.Nigeria, they need to take a leadership role. This can actually
:22:48. > :22:54.be done in the right way. We need happening day in and day out. This
:22:54. > :22:59.is because of theft and stealing. version that this is down to
:22:59. > :23:07.sabotage. They say they have taken images and time lines and that
:23:07. > :23:13.leaks from corrosive pipes, rather than sabotage. We have done this.
:23:13. > :23:22.We have invited people to come down. We build the pipeline for $1.1
:23:22. > :23:27.billion last year. We had to take it out again. I think we should all
:23:27. > :23:32.face reality. You cannot just take one case and make a total case out
:23:32. > :23:37.of it. How much have you had to put aside to cover the cost? Of the
:23:37. > :23:47.clean-up, which clean-up? The clean-up in the delta in Nigeria.
:23:47. > :23:53.last year. A similar number this year. We do this as part of the
:23:53. > :23:58.normal process. Will this cost billions going for it? It is too