Oil and Gas

Why oil prices will be 'robust' long-term: Shell CEO

Oil price will be 'robust' in long-term: Shell CEO
Oil price will be 'robust' in long-term: Shell CEO

The decline in the price of oil has been one of the most prevalent stories in financial markets this year. But Ben van Beurden, chief executive of Shell, the world's second-biggest listed energy company, is confident that oil will return to "very robust" pricing in the long-term.

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He told CNBC: "We see prices being very robust over the longer term, for fundamental reasons of growth in prosperity and demand. It's harder to find oil and more difficult to develop it, so I still see a very robust outlook."

Oil prices on all main indices have been driven lower this year by concerns about slowing economic growth, a strong U.S. dollar and higher production than some expected. On Wednesday, the daily basket price for Organization of Petroleum Exporting Countries (OPEC) stood at $88.32 a barrel, down from 89.37 the previous day.

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"In the short term, we have a trading strategy to inoculate ourselves from the swings," van Buerden said.

Shell's oil and gas business is also affected by sanctions against Gazprom, its partner in developing Russian shale oil, as part of Western penalties imposed on Russia over Ukraine. Last week, it suspended work on one of its joint ventures with the Russian energy giant.

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Van Beurden admitted the situation was "complex" but was confident that it would not be permanent.

"I can't see how it's going to be in the long-term interests of Russia or the West to have a broken energy relationship," he said.

"We have to take a long-term view. Some of them (Shell projects) may be put on pause, others will come back later, and others will be exempt from sanctions."

- By CNBC's Catherine Boyle