Shell’s deepwater production could double, to some 900,000 boe/d in 2020, compared with 450,000 boe/d in 2015, the super major said this morning.
Setting out its capital spending plans up to 2020, which are to be capped at US$25-30 billion a year, the firm said its focus would shift away from integrated gas projects, where, after buying BG Group for $70 billion, it had reached critical mass, and towards deepwater, chemicals, and then, only after 2020, shales and new energies.
Brazil and the Gulf of Mexico were highlighted as "the best real estate in global deep water" and where Shell is developing "competitive projects." But, asset sales totaling some $30 billion could also see the firm exit 5-10 countries.
"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," said CEO Ben van Beurden.
He said the “BG deal is an opportunity to accelerate the re-shaping of Shell." More synergies than expected are to be achieved at a faster rate, he said. Deal related synergies are set to increase 30%, from $3.5 billion to $4.5 billion, on a pre-tax basis in 2018.
Capital investment is set to be $25-$30 billion each year to 2020. Investment for 2016 is expected to be $29 billion, excluding the purchase price of BG, 35% lower than the pro-forma Shell-plus-BG level in 2014.
Image: Shell's Turritella FPSO, which is due to produce the deepwater Stones field in the US Gulf of Mexico.
Operating costs are also being reduced, with underlying operating costs set to be $40 billion at the end of 2016, 20% lower than in 2014.
Shell is also still planning to sell off $30 billion of assets in 2016-18, including some 10% of its oil and gas production, which would involve 5-10 country exits. "We expect to make significant progress on the first $6-8 billion of this program in 2016," the firm said.
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