The Royal Dutch Shell on Wednesday, June 8 said its yearly capital investment will be between $25 billion and $30 billion from 2016 through to 2020.
The firm’s Chief Executive Officer, Ben van Beurden made this known during the firm’s 2016 capital markets with Re-shaping Shell to create a world class investment case’as its theme.
“Capital investment will be in the range of $25-$30 billion each year to 2020, as we improve capital efficiency and ensure a more predictable development funnel for new projects. Investment for 2016 is expected to be $29 billion, excluding the purchase price of BG, some 35 per cent lower than the pro-forma Shell-plus-BG level in 2014,” Beurden said.
“In the prevailing low oil price 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 end of the range.
“New project start-ups since end-2014 should contribute some $10 billion of annual cash flow by 2018. Investment delivers new, profitable projects for shareholders.
“Programmes to sustainably reduce operating costs are in place across the company; we expect to reach a run-rate of $40 billion of underlying operating costs at the end of 2016, some 20 per cent lower than the 2014 pro-forma level for Shell-plus-BG with potential for further cost reduction.”
He noted that asset sales, as planned, are expected to be $30 billion for 2016-18, adding that “we have earmarked up to 10 per cent of Shell’s oil and gas production, including five to 10 country exits, for disposal. We expect to make significant progress on the first $6-8 billion of this programme in 2016.”
