SHELL is to slash its spending by $15bn (£10bn) over the next three years as the Anglo-Dutch oil giant attempts to protect itself from the collapse in oil prices.
In what will be one of the biggest cost cutting programmes in corporate history, Shell said it will cancel, cut or defer some of its most expensive projects after one of the biggest oil market downturns in years placed its investment plans under ‘severe pressure’.
Shell’s chief executive, Ben van Beurden, said the company “must be careful not to over-react” to the price of oil, which has plummeted 60% since June last year but warned that lower oil prices and the impact of its 2014 divestments would “likely reduce this year’s cash flow”.
“We are taking a prudent approach here. Shell is taking structured decisions to balance growth and returns,” van Beurden said.
Further reductions to capital spending are being considered “should the evolving market outlook warrant that step”, Shell said.
At the same time, Shell revealed that it will freeze its dividends at current levels and delivered a rise in profits to $4.2bn, which failed to meet analyst expectations.