Royal Dutch Shell ( RDS.A) announced Tuesday in its annual performance review that its total reserves at the end of 2008 were 11.9 billion barrels of oil equivalent, unchanged from the same period last year. The European integrated energy producer said that it added 1.2 billion barrels of oil equivalent from exploration and production activities last year. Another billion barrels of oil equivalent were added via business development activities such as joint ventures and acquisitions. Regardless of these reserve additions, Shell's net hydrocarbon sales offset the firm's organic reserve additions, leaving its total net reserves unchanged for the year. Shell's average finding and development costs for E&P reserve additions were between $2 and $3 a barrel, according to a company representative. "Three hard truths still shape our approach," said Jorma Ollila, chairman of Royal Dutch Shell, in a message to shareholders. "When the economic crisis passes, global demand for energy will continue upward as populations grow and living standards rise; supplies of easy-to-access oil will struggle to keep pace with demand; and an increasing use of fossil fuels will drive up emissions of carbon dioxide (CO2)." While Shell pressed forward with major capital spending projects like the Sakhalin II project off of the coast of Russia and a new gas to liquids plant in Qatar, the company also backed away from some proposed investments in response to the global economic turmoil.
"In a volatile business environment, the need to cut costs is paramount," said Jeroen van der Veer, CEO of Royal Dutch Shell. "We postponed some investment decisions, including the second expansion phase of our oil sands operation in Canada."