Oil giant Shell says it will step up its sell-off programme and cut spending this year after seeing its 2013 earnings fall more almost 40%.
The Anglo-Dutch oil major said it was looking to sell off around $15billion (£9billion) of assets this year.
Already this year it has sold off a 23% stake in the BC-10 project off the coast of Brazil, and its interest in the Wheatstone LNG project in Australia, both in deals worth more than $1billion.
It has recently been linked with the sale of its Ho-Ho pipeline carrying oil from Houston, Texas to Houma, Louisiana, and its mature assets in the North Sea
Capital spending is also being slashed after the company saw its earnings for 2013 drop fall to $16.7billion, down 39% on 2012’s $27.2billion. 2014 will see Shell invest $37billion – including previously announced acquisitions – compared to 2013’s $46billion spend.
New chief executive Ben van Beurden, who took charge of Shell on January 1, admitted the firm faced hard choices on what projects it would support over the next 12 months.
“Our ambitious growth drive in recent years has yielded a step change in Shell’s portfolio and options, with more growth to come, but at the same time we have lost some momentum in operational delivery, and we can sharpen up in a number of areas,” he said.
“Our overall strategy remains robust, but 2014 will be a year where we are changing emphasis, to improve our returns and cash flow performance.”
Among the high profile casualties of Shell’s cutbacks will be the scrapping of its plans for oil exploration in Alaska this year following a recent US court ruling.
“This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,” said van Beurden.
“We will look to relevant agencies and the court to resolve their open legal issues as quickly as possible.”
Earnings from its upstream operations were hit by maintenance costs and the ongoing security situation in Nigeria, which saw production from the African coundry drop by 40,000 barrels of oil per day compared to the previous year.
Upstream earnings for the year fell more than $5billion to $15,177million on 2012’s results, while production for the year dropped to 3.19million barrels per day from 3.26million the day before, with new start-ups – including the Pearl project in Qatar – adding 170,000boed to production.
However, low gas prices in North America and increased refining margins have led the firm to announce plans for restructuring of its downstream operations.
Van Beurden revealed the form would no longer be providing updates against previous targets and cash flow.
“I want Shell to be measured on our competitive performance,” he said.
“We are making hard choices in our world-wide portfolio to improve Shell’s capital efficiency.”
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