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Nigeria: Shell Rules Out Divestment in Nigeria, Others This Year

Simon Henry, CFO, Royal Dutch Shell Plc

Simon Henry, CFO, Royal Dutch Shell Plc

Article by Daniel Adugbo published 1 May 2015 by

Shell Rules Out Divestment in Nigeria, Others This Year

Royal Dutch Shell said yesterday it had reduced its expected 2015 capital expenditure (capex) to $33 billion from $35 billion as the company continues to adjust its business to the lower oil-price.

Releasing its first-quarter results yesterday, Shell’s Chief Financial Officer (CFO) Simon Henry said the capex this year would be $33 billion, or “potentially less,” a reduction of at least $2 billion compared with guidance given by Shell three months ago.

Henry said that it had highlighted a number of projects where it could reduce its financial exposure, including the Majnoon project in Iraq and Carmon Creek in Canada.

“We have pushed out the Majnoon decision into 2017 or later,” Henry said, referring to a plan to implement full field development at the southern Iraqi project.

Henry said Shell was confident that oil market fundamentals would reset in time and that the marginal cost of production would not fall to $50/b or below.

Shell has also been offloading assets in recent years, but Henry said it was becoming “more difficult to divest” and that any further selloffs in 2015 in the upstream would not be “that material.”

However, he said, downstream asset sales are likely to continue through 2015.

Shell said new startups and project rampups contributed around 137,000 boe/d (barrels of oil equivalent). These included Bonga NW in Nigeria, Gumusut Kakap in Malaysia, and Mars B and Cardamom in the Gulf of Mexico.

Shell is Nigeria’s oldest energy company. It also operate Nigeria’s largest liquefied natural gas (LNG) plant, which exports all over the world.

Shell also said it was still looking for acquisitions after agreeing to buy rival BG for $70 billion in the biggest oil merger of the past decade, but lacked resources to perform another mega-deal.

“We will look at anything we might be interested in … We don’t have a lot of cash left to be doing much more,” said Henry.


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