Royal Dutch Shell plc (ADR) (RDS.A), Exxon Mobil Corporation (XOM): Can Shell’s New CEO Lead It to Greatness?

On July 9, Royal Dutch Shell plc (ADR) (NYSE:RDS-A), the Anglo-Dutch oil giant, announced a new CEO. His name is Ben van Beurden, and he will replace outgoing chief executive Peter Voser next year.

Before Royal Dutch Shell plc (ADR) (NYSE:RDS-A) made the announcement, few people, even inside the industry, knew who van Beurden was. He only recently joined Royal Dutch Shell plc (ADR) (NYSE:RDS-A)’s executive committee and was by no means leading the pack of executives expected to succeed Voser.

But upon closer review, he may be just the right man for the job. Let’s take a closer look.

Royal Dutch Shell plc (ADR) (NYSE:RDS-A)’s new CEO
Van Beurden, who holds a master’s degree in chemical engineering, joined Shell in 1983. From 2007 to last year, he ran Royal Dutch Shell plc (ADR) (NYSE:RDS-A)’s chemical business, where he oversaw various initiatives in refining and chemicals manufacturing. His keen focus on slashing costs, which he accomplished by using natural gas instead of oil at Royal Dutch Shell plc (ADR) (NYSE:RDS-A)’s plants in the U.S. Gulf coast, has yielded impressive results.

Under his watchful eye, Shell’s chemicals unit saw its profits more than triple over the past five years, from $416 million in 2008 to $1.4 billion last year. In fact, Shell’s downstream division, which encompasses refining, chemicals and marketing, now represents a fifth of the company’s net income and a quarter of its operating cash flow.

Another area where van Beurden may shine is in helping grow Shell’s natural gas business. Under Peter Voser’s reign, natural gas has become a much bigger part of the company’s operations. Earnings from its integrated gas division, which encompasses its LNG business as well as gas-to-liquids facilities such as Pearl in Qatar, have almost quadrupled over the past five years. In fact, Shell is set to produce more gas than oil this year for the first time in its more than a century-long history.

With his extensive experience with natural gas, and especially LNG, this is where van Beurden should be able to continue, and hopefully improve upon, Voser’s legacy. After becoming Shell’s general manager of operations of Malaysia LNG in 1996, he was promoted to Shell’s vice president of Mexico Gas and Power. In addition, he was heavily involved in some of Shell’s most important LNG projects, including its Prelude floating LNG plant in Australia.

Challenges for van Beurden
But despite the solid performance from its downstream operations and its integrated gas division, Shell and van Beurden face their share of hurdles.