Europe faces painful \u201cindustrial rationalisation\u201d due to its energy crisis that risks political trouble, the head of Shell warned Sunday, as the oil giant joined a natural gas project in Qatar.<\/p>\n\n\n\n
Shell chief executive Ben van Beurden agreed a deal for a 9.3 percent stake in Qatar Energy\u2019s North Field South project, that will play a major role in the Gulf state\u2019s effort to increase liquefied natural gas (LNG) production by 50 percent in the next five years.<\/p>\n\n\n\n
At the signing ceremony in Doha, van Beurden said European industry face taking a major hit from the energy crisis, worsened by the Russian invasion of Ukraine.<\/p>\n\n\n\n
Europe has reduced consumption \u201cquite effectively, quite significantly\u201d following the loss of 120 million tonnes of Russian gas a year, van Beurden said, but \u201ca lot of this reduction is achieved by switching off industry\u201d.<\/p>\n\n\n\n
Europe has desperately searched for quick alternatives to Russian gas, but van Beurden said Europe would need large amounts of LNG for decades.<\/p>\n\n\n\n
\u201cA lot of people say, turn down the thermostat,or maybe don\u2019t switch on the air conditioning,\u201d he said.<\/p>\n\n\n\n
\u201cBut there is also \u2018why don\u2019t we switch off the fertiliser plant that we have\u2019 or \u2018let us scale down on some petro chemicals production in general\u2019. And that rationalisation, if it goes on long enough, becomes permanent.\u201d Van Beurden said there have been \u201csome victory laps\u201d in Europe over the way it has reduced demand, but added \u201csome of it is actually bad news for the long term, namely economic or industrial rationalisation.\u201d The Shell chief, who will retire at the end of the year, said industrial cuts could spark some \u201crejuvenation\u201d, but also brought risks.<\/p>\n\n\n\n
\u201cTo do it at this scale, this abruptness, at a time of economic challenges in general, I think will bring quite a bit of pressure on European economies, and perhaps also a lot of pressures for the political system in Europe,\u201d he said.<\/p>\n\n\n\n
British-based Shell is the second European company, after France\u2019s TotalEnergies, to take a stake in North Field South. Twenty-five percent of the project has been reserved for international energy giants.<\/p>\n\n\n\n
Expansion across the North Field, the world\u2019s biggest proven gas reserves, is intended to increase Qatar\u2019s LNG production by 50 percent to about 127 million tonnes a year by 2027.<\/p>\n\n\n\n
Shell and TotalEnergies took stakes earlier this year in the North Field East zone.<\/p>\n\n\n\n
\u201cNatural gas assumes greater importance in light of recent geopolitical turmoil,\u201d said Qatar\u2019s Energy Minister Saad Sherida al-Kaabi as he welcomed the Shell deal.<\/p>\n\n\n\n
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