Oil giant Royal Dutch Shell yesterday vowed to review its North Sea operations as part of a plan to sell off £9billion worth of assets worldwide.
Ben van Beurden, who became chief executive of the firm on January 1 – said Shell would be making “hard choices” about all of its assets after the company reported a 48% slide in profits.
Shell will be running the slide rule over its 150 “core performance units” on the basis of whether the assets are “competitive, credible and affordable”. Assets that are “too expensive to keep cash generative” will be sold, he added.
Mr van Buren noted that Shell had “very mature” assets in the North Sea but that others – such as its 55% stake in the Schiehallion field west of Shetland – offered “important growth opportunities”.
He said: “The North Sea will be no exception. There are no reasons for us to take a different view to any part of our portfolio.
“It will be a matter of looking at all the different components and just asking ourselves are they still sufficiently attractive and resilient to keep.
“If they run out, which will be the case eventually for all assets, yes we will have to have a discussion.
“There is no reason why we should have a different approach to the North Sea but at the same time we also see lots of opportunity in the North Sea.”
His comments were made alongside annual results which confirmed the profit warning earlier this month about a poor final quarter of the year.
Profits for the three-month period slumped to £1.75billion from £3.4billion a year earlier, with the full-year figure down 23% to £11.8billion.
Shell will reduce capital spending from £27.8billion last year to around £22.4billion and will halt exploration activities in offshore Alaska as a result of opposition from a US court.
The worsening security situation in Nigeria, where the company has a long-term presence, weak refining margins and low natural gas prices in North America have increased the pressure on Shell’s performance.
Nevertheless, Nigeria remained on of the parts of the group’s portfolio with “huge potential” despite it being “complicated”, Mr van Beurden said. Other areas of emphasis for the company were Iraq and oil sands.
“The question becomes, how do you apportion your growth. How much do you step on the gas right now, and how much do you reserve for the future. We have to get the balance right.”
The Dutch national rose through the ranks over three decades at Shell before securing the top post after his predecessor, Peter Voser, announced his retirement last year.
He said the company will step up the pace of asset sales of around £9.1billion in the next year in both exploration and downstream.
Mr van Beurden said: “We are making hard choices in our worldwide portfolio to improve Shell’s capital efficiency.”