New Shell CEO has toughest task in European business

Peter Voser takes over as CEO of Europe's largest company by market value on Wednesday. In recent years, Shell has set and then smashed European records for corporate earnings, notching up net profits of $31 billion last year.

A fall in oil prices hit first quarter profits, but crude has since more than doubled to above $70 a barrel, leading analysts to forecast that Shell is likely to top earnings tables again this year.

With a raft of big new projects coming onstream, Goldman Sachs reckons the oil major will have the best cash flow growth in the oil sector over the next three to five years, suggesting Shell is well placed to out-earn other European companies for some time.

However, investors are looking for much more from Voser, who until his elevation was Shell's chief financial officer.

The 50-year old Swiss, who enjoys mountain hiking and football, will be immediately under pressure to start building a pipeline of new projects that will drive Shell's growth into the second half of the next decade.

"We regard visibility around ... production evolution post-2013, without imminent new project sanction, as low. We are worried that this leaves the investment thesis in stasis," analysts at Citigroup said in a research note.

In the past two years, Shell has pressed the button on few big developments. Instead the company chose to hold off until rampant cost inflation in the sector, which had put the profitability of some planned ventures in doubt, cooled.

A raft of planned projects such as an expansion of its Athabasca oil sands project in Canada, the Sunrise liquefied natural gas (LNG) project in the Timor Sea and the Gorgon and Gladstone LNG projects in Australia, now await sanction.

However, big drops in the costs of building such projects have failed to materialize and the oil services sector is again starting to show signs of tightness, Martjin Rats, oil services analyst at Morgan Stanley, said.

Voser now faces the choice of stalling investments for even longer, or proceeding with projects which offer tighter margins. Either way, future profits may be at risk.

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Investors generally welcomed the selection of Voser last year, to replace Jeroen van der Veer.

However, for some, this was more relief than joy.

"There was a dearth of viable candidates. He was the best but I don't think there was a strong competition," Stephen Thornber, fund manager at Threadneedle, said.

The first major strategic move Voser has fronted was a restructuring, announced last month, of Shell's main operating divisions.

This is aimed at cutting costs and ensuring more projects are delivered on time and on budget.

Such plans are usually well received by the market but Shell's shares fell on the day of the announcement, against a rise in the sector, partly because the company did not commit to any firm targets.

Voser, who has spent all his career in business and finance roles at Shell, save for a two-year stint as CFO of Swiss engineering group ABB, also takes the helm as Shell's reputation on environmental and human rights issues frays.

A lawsuit filed in New York accusing the oil giant of complicity in the execution of human rights activists in Nigeria in the 1990s, which Shell settled earlier this month, renewed criticism of the company's activities in Nigeria, often seen as the poster child for how oil wealth can damage a country.