He’s since streamlined a convoluted corporate structure and taken advantage of the record oil prices to ramp up investment in exploration and new technologies. He spoke with NEWSWEEK’s Rana Foroohar last week about the industry’s most pressing questions, including oil nationalism, security and those record-high prices. Excerpts:

There’s no point in predicting the oil prices, because it tends to be a pretty bad prediction. Why is that? Because there are so many factors at play. What I will say is that as recently as this weekend, I looked at data showing that crude-oil stocks in factories around the world are very normal or even better than normal. It’s a bit of a mixed picture, but by and large, there is no physical shortage in the world. So there must be two reasons [for the current prices]–geopolitical tensions in the world, and the amount of nontraditional money like hedge funds moving into the oil market.

Nobody knows the correlations there; it’s new territory. But some people estimate there is north of $100 billion in hedge-fund money in oil markets right now, which is of course significant. But that said, I’ve grown up in a physical world, and what I see from the physical world is that the lines of ships at refineries, and things like that, are OK.

We don’t give the precise figures. But we do believe that future prices will be significantly lower than today.

Easy oil is now mostly in the hands of state-owned companies. The added value of multinational companies like Shell is that with cutting-edge technology we can be very good in unconventionals–oil and gas that doesn’t easily come out of the ground. That would include things like oil sands, oil shale and deepwater reserves.

Of course, when the oil prices are high, the governments take a very sharp interest, usually at a very senior level, over what’s going to happen with that national resource. I understand that. But in the end, you have to stand politely with your cap in your hand, and make sure that you propose something that is in the interest to that particular government–otherwise you don’t do business. That was the same 20 years ago; it’s the same now and will be the same 20 years from now. Russia has a lot of gas reserves. They know that Shell is good, we are leading in liquid natural gas, and they want access to that expertise as well.

I think the Russians have a bit of a point in that they feel that the West is looking only one way–to their own advantage. If the Russians want to invest in the West in distribution companies, I think that is very good news. Then you have mutual dependency, which is win-win.

Yes, these are real opportunities, because to execute multibillion-dollar projects, usually in very hostile environments, and do it with the same safety statistics as in the West, is quite a feat. We have three such projects at the moment [Sakhalin in Russia, Bonga in Nigeria and Nanhai in China], and we expect to have 10 in the next decade.

What do prices do to the world economy? So far the economy has been doing quite well, but will the energy prices slowly start to bite? Secondly, of course, we are fairly concerned about changing tax issues [i.e., the potential of a windfall tax]. People say, OK, you oil companies have made a lot of profits, so what happens to taxes? Our message is that if there is the least perceived shortage of new-supply capacity, the best thing we can do is to invest a lot; and if we pay more in taxes we can invest less. It has to come from somewhere.