Energy giant Shell to slash spending by a third

Shell is to sharply scale back investment and look for more cost savings as the British/Dutch oil major attempts to adapt to depressed oil prices.

Ben van Beurden is seeking to 'reshape' Shell. Picture: Adrian Dennis/AFP/Getty Images

The group said yesterday as part of a capital markets presentation that spending will be slashed 35 per cent to between $25 billion and $30bn (£17.3bn and £20.8bn) over the next four years.

Shell said: “In the prevailing environment we will continue to drive capital spending down towards the bottom end of this range; or even lower if needed. In a higher oil price future we intend to cap our spending at the top of the range.”

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The company also increased its projected efficiency savings from its $54bn merger with BG to $4.5bn – up from its previous estimate of $3.5bn.

Shell chief executive Ben van Beurden said: “As well as low oil prices today, we are seeing higher levels of price volatility, due to geopolitical change, the speed of information flows, and the pace of innovation in our sector.

“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 focused and more resilient company.”

The oil price has climbed to about $50 dollars from lows of $28 in January – but still well off its $115 peak in June 2014.