Shell to scale back spending and sell more assets

Ben van Beurden 'not prepared to commit further resources'. Picture: AP
Ben van Beurden 'not prepared to commit further resources'. Picture: AP
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Shell has shelved controversial plans to drill for oil in the Arctic this year and said it would speed up its disposal programme in a bid to improve returns in the wake of a shock profit warning.

The oil giant has spent around $4.5 billion (£2.7bn) searching for oil off the coast of Alaska since 2005, but has faced intense opposition from green campaigners and “substantial obstacles” after a US court ruled the sale of drilling leases relied on flawed environmental reviews.

WWF Scotland director Lang Banks called on Shell to “do the planet a favour” and scrap its Arctic ambitions entirely.

He added: “Neither Shell nor any other oil company has demonstrated that it has the technology or techniques to safely drill for oil in Arctic seas.”

Shell chief executive Ben van Beurden said: “The lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014. We will look to relevant agencies and the court to resolve their open legal issues as quickly as possible.”

The move echoes Edinburgh-based Cairn Energy’s announcement earlier this month that it was putting its Arctic plans on the back burner to focus on the North Sea and Atlantic margin.

Van Beurden, who took the helm the start of the year, aims to boost Shell’s returns through spending cuts and asset sales.

The group is selling part of its stake in a Brazilian offshore oil project for about $1bn, having recently agreed the $1.1bn disposal of its interests in an Australian liquefied natural gas scheme.

The group is targeting $15bn in disposals this year, while capital spending will fall to $37bn, down from $46bn in 2013.

Fourth-quarter profits came in at $2.9bn, down from $5.6bn a year ago but in line with this month’s profit warning.

Jonathan Jackson, head of equities at Killik & Co, said the broker remained positive on Shell, which raised its fourth-quarter dividend 5 per cent to 45 cents.

He added: “The stock offers an attractive dividend yield, growing in real terms, and the prospect of value being unlocked from disposals.”