Shell eyes return to growth as reserves jump

Italian rival Eni said on Friday it aimed to grow output by 2.5 percent per annum to 2013 while European number two BP Plc is targeting annual growth of 1-2 percent.

"Shell's strategy announcement reinforces our view that the company is at an important turning point operationally," Gordon Gray, oil analyst at Collins Stewart said in a research note.

Shell's London-listed "A" shares closed up 1.3 percent at 1,936-1/2 pence, just ahead of a 1.1 percent rise in the STOXX Europe 600 Oil and Gas index <.SXEP>.

Chief Executive Peter Voser said higher output would allow Shell to boost cashflow sharply and become cashflow neutral by 2012. Irene Himona, oil analyst at Exane said this was a year earlier than she had expected.

Shell also aims to grow output beyond 2012, although Voser said he had dropped a 2-3 percent long-term growth target.

Shell is looking to the deep water of the Gulf of Mexico, tight gas assets in North America and liquefied natural gas and coal seam gas in Australia to support its longer-term aims.

As part of this strategy, Shell and PetroChina <0857.HK> hope to agree a joint $3 billion takeover of Arrow Energy Ltd and Shell said talks with the Australia coal seam gas company were ongoing.

Previously, Shell and rivals concentrated much of its effort on expanding in Africa and Russia. Such places have big reserves but Shell has decided political risks and high taxes make them relatively less attractive than fields in the Western world.

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