July 9 (Bloomberg) -- Royal Dutch Shell Plc unexpectedly named refining boss Ben van Beurden to succeed Chief Executive Officer Peter Voser as Europe’s largest oil company looks to manage rising capital spending.
Van Beurden, who will take over in the New Year, has led the company’s downstream unit, which refines crude and sells products to consumers, since January and was previously head of the chemicals business. When Voser announced his retirement in May, Chief Financial Officer Simon Henry and U.S. head Marvin Odum were seen as front runners for the top job.
“This is going to be a bit of a surprise to the market, I don’t think he’s that well known,” said Jason Gammel, an oil industry analyst at Macquarie Capital Europe Ltd. in London. “The primary point on his resume is that he turned around the chemicals unit when they had seriously considered shutting it.”
While Shell’s share price has outperformed peers during Voser’s four-year tenure, van Beurden will have to grapple with a rising capital budget as The Hague-based company tries to boost oil and gas production. Shell aims to achieve 4 million barrels a day of output as early as 2017, from 3.6 million in the first quarter, and plans to invest more than $30 billion a year in projects.
“The production target of 4 million barrels a day is punchy, and van Beurden will do well to achieve it,” said Neill Morton, an analyst at Investec Securities Ltd. in London. “Other challenges include sorting out Shell’s somewhat messy portfolio onshore U.S. and offshore Australia, as well as improving its under-performing refining operations.”
Shell rose 1.5 percent to 2,161 pence in London. Shares have gained 1.9 percent this year.
Van Beurden, 55, joined Shell in 1983 and has worked in the Netherlands, Africa, Malaysia, the U.S. and the U.K. He is a Dutch national with a degree in chemical engineering and married with four children. He spent 10 years working in Shell’s liquefied natural gas business.
The nomination and succession committee that appointed van Beurden is led by Chairman Jorma Ollila, the former CEO of mobile phone maker Nokia Oyj. Former Deutsche Bank AG CEO Josef Ackermann and Hans Wijers, previously CEO of Europe’s biggest paintmaker Akzo Nobel NV, are also on the committee.
Henry, Shell’s CFO, and Odum, head of the U.S. business, had been tipped by analysts at Macquarie and RBC Capital Markets as possible successors to Voser, who announced his retirement in May.
Under Voser, Shell outperformed most of its rivals among the world’s five biggest oil companies. The 41 percent gain in the share price compares with a 34 percent increase for Exxon Mobil Corp. and declines for European peers BP Plc and Total SA. Only Chevron Corp. has done better, gaining 87 percent since July 1, 2009, the day Voser started.
Profitable investments such as the $19 billion Pearl gas-to-liquids plant in Qatar have bolstered returns at Shell. The company raised its dividend for the first time since 2009 last year and increased it again for the first quarter.
“Ben has deep knowledge of the industry and proven executive experience across a range of Shell businesses,” Ollila said in a statement. “Ben will continue to drive and further develop the strategic agenda that we have set out, to generate competitive returns for our shareholders.”
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