Royal Dutch Shell plans to cut $ 9 billion from its spending plans to face the collapse in oil market prices following the coronavirus outbreak.
The oil giant has established plans to cut its operating costs by between $ 3 billion and $ 4 billion this year, while reducing its planned capital expenditure by $ 5 billion to $ 20 billion a year.
The Anglo-Dutch company will also rule out plans to repurchase shares that were paid instead of dividends during the last oil market slowdown in 2016.
Shell hopes that "decisive action" will help protect vital cash flows to maintain one of the largest annual shareholder payments for any company. It pays $ 16 billion in dividends each year, but analysts fear the policy is threatened by the slowdown in the market.
Oil prices fell at their fastest rate in a generation after a double blow caused by the outbreak of the Covid-19 virus, which reduced demand for energy, and the oil price war in Saudi Arabia, which will dramatically increase the supply of oil. market oil.
Shell chief Ben van Beurden said the new measures "will guarantee the financial strength and resilience of our business" during the "difficult conditions" faced by major oil companies.
"The combination of a sharp drop in demand for oil and a rapid increase in supply may be unique, but Shell has faced market volatility many times in the past," he said.
Shell will continue to advance its project pipeline to help shift its portfolio to cleaner energy sources, a spokeswoman said, but keep in mind the macroeconomic outcome and any impact on your supply chains.
Shell planned to spend up to $ 2 billion a year on "new energy" in 2020, before increasing its ecological commitments to a maximum of $ 3 billion a year between 2021 and 2025.
Green investments by oil companies, while a fraction of their overhead, can become more difficult during the pandemic, as companies are under increasing financial pressure.
Shell's market value has dropped by more than half since January, when the pandemic outbreak caused a sharp drop in demand from the world's largest energy importer.
Source: Guardian / Reuters // Image credits: Sergio Moraes / Reuters