WASHINGTON (Dow Jones)--Royal Dutch Shell PLC (RDSA, RDSA.LN) Chief Executive Peter Voser said Thursday his company is in the final stages of negotiating a natural gas deal in southern Iraq, and he's "pleased" with its progress.
"It's not about resources in the ground, it's actually about capturing the flaring of current associated gas and making it available for domestic gas use, and most probably later on, for [liquefied natural gas] export.," Voser said.
Speaking at think-tank event here, the CEO also said his company was in discussions with the Iraqi government for the next round of oil development opportunities in the country, seeking better fiscal terms than the first round.
Although Shell wanted to participate in the first round of the oil deals, "the conditions offered by the Iraqi government were not to our liking in terms of not giving us sufficient profitability, and at the end of the day we did not accept the deals.
"We're in constant contact and discussions with the Iraqi government," Voser said. "There is a second round in planning, and we do hope that the second round will be more successful for both sides," he added.
Peter Voser warned Thursday that under-investment in the oil industry is setting the world up for a "critical" supply crunch in the next few years when the global economy rebounds.
Speaking at a think tank event here, Voser said "a drop in investment makes a future supply crunch a plausible scenario."
Petroleum investments have dropped 20% worldwide, "and if this continues, quite clearly in a few years time, when demand comes back, we will look at a supply situation which could be critical," he said.
He said Shell has shifted its portfolio in recent years so that 70% is in OECD countries. The shift takes advantage of higher returns on oil and natural gas products in OECD countries when prices are up. Non-OECD countries often increase their share per barrel when prices rise.