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Shell Forced to Scale Back 
Energy

Shell Forced to Scale Back 

As with most oil companies, 2015 has been a rough year for Royal Dutch Shell. The Anglo-Dutch company reported a third quarter loss of $6 billion, which included $7.9 billion in impairment charges. During its third quarter earnings call, Shell’s CEO Ben van Beurden summed up the company’s strategy, emphasizing restraint. “Grow to simplify” is how he put it. What that means in practice is scrapping the Arctic campaign; selling assets elsewhere around the world, including Nigeria; and focusing on its merger with BG, which is a big bet on LNG, Oil Price reported. Spending billions of dollars on megaprojects has fallen out of favor. In an effort to correct damaged balance sheets and still protect dividends, exploration budgets are getting chopped. Compared to 2013 spending levels, the oil majors will halve their exploration budgets next year to just $25 billion, according to Tudor, Pickering, Holt & Co. Consequently, fewer projects are moving forward. While there are still some megaprojects under development, they were greenlighted years ago. Moving forward, the focus will be on smaller, less risky projects that have lower upfront costs.

 

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