Shell Slashes Capital Spending, Records 83% Drop In Profit

Royal Dutch Shell has drastically reduced its capital spending for 2016 to $30 billion, even as it recorded $4billion profit, but an 83 per cent drop in its earnings for the first quarter of 2016.

Shell, and other oil multinationals are currently facing tough times due to low crude prices, but its Chief Executive Officer, Ben van Beurden, said its downstream and integrated gas businesses remain its area of strength.

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The results were the first Shell has posted since its acquisition of BG Group in February 2016 but it said the impact of the acquisition on the result was immaterial.

Shell’s earnings on a current cost of supplies (CCS) dropped by $4 billion to $800 million down from $4.8 billion in the first quarter of 2015.

Beurden said: “Shell’s integrated activities differentiate us, with our Downstream and Integrated Gas businesses delivering strong results and underpinning our financial performance despite continued low oil and gas prices.

“We continue to reduce our spending levels, to capture cost opportunities and manage the financial framework in today’s lower oil price environment. The combination with BG is off to a strong start, as a result of detailed forward planning before the completion of the transaction. This will likely result in accelerated delivery of the synergies from the acquisition, and at a lower cost than we originally set out.

“Putting all of this together, capital investment in 2016 is clearly trending toward $30 billion, compared to previous guidance of $33 billion, and some 36 per cent lower than combined Shell and BG investment in 2014.

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Daniel Enisan is a content writer at With a degree in mass communication, Daniel is a full breed journalist. Daniel is a realist, loves the use of sarcasm, a movie and music junkie. He is also a poet and a good listener.

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