Royal Dutch Shell will exit oil and gas operations in up to 10 countries. As Sonia Legg reports, the Anglo-Dutch company is aiming to deepen cost cuts and narrow its focus following its $54 billion acquisition of BG Group.
It's eaten too much and needs to shed a few pounds. The world's second biggest international oil company after Exxon and the top trader in liquified natural gas is on a diet. Shell's about to exit operations in up to 10 countries after what some have called an over indulgent $54 billion acquisition of BG group. SOUNDBITE (English), WORLD FIRST, CHIEF ECONOMIST, JEREMY COOK, SAYING: "The amount of debt that they've had to take on has been absolutely vast. We know that they're trying to cut their operating costs by 20-25 percent by the end of the year, so it's not just cutting fat it's cutting muscle." 2016 capital expenditure has been cut for a third time to $29 billion from an initial $35 billion. Shell also wants to make an extra $1bln in savings from the integration of BG, partly to boost its underperforming shares SOUNDBITE (English), WORLD FIRST, CHIEF ECONOMIST, JEREMY COOK, SAYING: "I don't think they're regretting it, in the grand scheme of things but certainly being able to consume that company (BG) within Shell is proving a lot more difficult and certainly a lot more costly." The menu allows for a doubling of deepwater production, a bigger chemicals business and a new polyethylene plant in the US. It'll cut back on its integrated gas business, sell assets worth $30 billlion and make 12,500 job cuts this year. The calorie intake though is dependent on oil at $60 a barrel - at the moment it's around $50.