Shell to exit oil and gas trade in up to 10 countries

Royal Dutch Shell will exit oil and gas operations in up to 10 countries.
The latest move will make Shell a smaller company that offers investors access to a more gas-heavy portfolio.
The latest move will make Shell a smaller company that offers investors access to a more gas-heavy portfolio.PHOTO: BLOOMBERG

LONDON • Royal Dutch Shell is to exit oil and gas operations in up to 10 countries in a drive to deepen cost cuts as it weathers weak oil prices and pays down debt following its US$54 billion (S$73 billion) acquisition of BG Group.

The company is active in more than 70 countries and said it would like to focus on 13 nations where it is making good returns, including Brazil, Australia and the US.

"Our portfolio is probably more diverse and spread around the world, and in some parts more mature, than we would like it to be," Shell chief financial officer Simon Henry told reporters yesterday.

The move, which includes the sale of 10 per cent of its oil and gas production assets, will make Shell a smaller company that offers investors access to a more gas-heavy portfolio than some of its rivals such as Exxon Mobil.

Presenting its strategy following the close of the BG deal in February, the Anglo-Dutch company outlined plans to target annual spending of US$25 billion to US$30 billion until the end of the decade, or less if oil prices remain below US$50 a barrel.

Following its takeover of rival BG, Shell expects also to make higher cost savings than previously announced, the company said in a statement. It said it anticipated savings of US$4.5 billion in two years' time, US$1 billion more than previously forecast.

Chief executive officer Ben Van Beurden, who staked his reputation on buying BG as oil prices sank, is promising investors higher returns and cash flows at lower oil prices as he resets the company.

He has renegotiated contracts, eliminated thousands of jobs, maintained Shell's asset sale programme and sought to improve efficiency to weather the oil market slump.

Shell's B shares, the most widely traded, rose as much as 3 per cent and traded 2.9 per cent higher at 1,761 pence as of 12.09pm in London.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 08, 2016, with the headline 'Shell to exit oil and gas trade in up to 10 countries'. Print Edition | Subscribe