Business

Royal Dutch Shell cost-cutting drive to continue

Shell flag Image copyright AP

Royal Dutch Shell plans more asset sales and cost-cutting over the next few years as the energy giant adjusts to prolonged low oil and gas prices.

Announcing a new mid-term strategy to transform the company, Shell said it expected to save another $1bn (£690m) from its £35bn takeover of BG Group.

Critics said Shell overpaid for BG, but chief executive Ben van Beurden told the BBC he would do the same again.

"We actually see that it's worth more than we thought it was," he said.

He confirmed that Shell was cutting another 2,200 jobs after the BG deal, on top of the 2,800 already announced. Shell has announced more than 10,000 job cuts globally over the last two years.

In a statement, Mr van Beurden said: "By capping our capital spending in the period to 2020, investing in compelling projects, driving down costs and selling non-core positions, we can reshape Shell into a more focussed and more resilient company, with better returns and growing free cash flow per share."

Shell added that it would forge ahead with $30bn of asset sales over the next two years.

It also expects to make savings of $4.5bn from its merger with BG, up from an earlier estimate of $3.5bn.

In May, Shell announced that first-quarter profits had fallen to $800m from $4.8bn a year earlier, blaming the slump on lower oil prices.

The price per barrel is now around $50, having risen sharply since the start of the year, but Mr van Beurden told the BBC that he did not know if the price would rise further in the short-to-medium term.

The slump in prices has caused energy groups worldwide to cut spending, slash jobs and sell assets during the past year.

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