European Energy Shortages Could Be Felt By April

Energy shortages could hit Europe by next month, Shell CEO Wael Sawan said on Tuesday, adding that securing adequate energy supply was critical to national security.

Countries cannot have national security without energy security, Sawan said, adding that Shell was trying to work with governments to help them address the energy crisis, including with storage and purchasing. The Middle East conflict, now in its fourth week, has already affected supplies of jet fuel, with diesel set to be next, followed by gasoline as summer driving season gets underway in the Northern Hemisphere, Sawan said.

The war has damaged major energy facilities and nearly halted shipping through the Strait of Hormuz - which handles about 20% of global oil and liquefied natural gas flows.

"South Asia was first to get that brunt. That's moved to Southeast Asia, Northeast Asia and then more so into Europe as we get into April," he said while speaking at the CERAWeek conference in Houston, Texas.

Germany's Economy Minister Katherina Reiche also warned that energy supply scarcity could occur in late April or May if the conflict continues.

VENEZUELA

Shell is mainly looking at natural gas projects in Venezuela, Sawan said, and also evaluating oil opportunities.

The British major could give the green light to one or two projects in Venezuela before year-end if the fiscal and legal situation in the country allows, Sawan said. Venezuela's National Assembly approved an oil reform in January, but oil executives have said more needs to be done to secure foreign investment.

This month, Shell signed preliminary agreements with the Venezuelan government to develop oil and gas projects, which could give the company access to coveted areas.

Shell and U.S. company Chevron have been closing in on the first big energy production deals with Venezuela, five sources close to the negotiations told Reuters this month.

The deals would allow both companies to boost oil and gas production in the South American country, the biggest steps to date toward what U.S. President Donald Trump has said would be a $100 ‌billion effort to rebuild Venezuela's oil industry after decades of mismanagement and underinvestment under Maduro and his predecessor, Hugo Chavez.

"What we are looking at, at the moment, is where we can add value to Venezuela, the Venezuelan people," Sawan said. "Initially, I would say it's more geared towards gas, and in particular gas that can be monetized through LNG."

Shell has progressed slowly in recent years to develop the Dragon offshore gas project in Venezuela. The company, which struggled to advance it dueto U.S. sanctions on Venezuela's energy sectors, is now trying to move it forward so the gas can be turned into LNG in neighboring Trinidad and Tobago.

(Reuters)