LONDON — Anglo-Dutch oil company Royal Dutch Shell plans to sell off assets, cut spending and freeze a controversial Arctic drilling program in a new focus on returns following a major profit warning. Just a month into his new job as chief executive of the world's No.3 investor-owned oil company, Ben van Beurden set out plans to make the group much leaner. “Our overall strategy remains robust, but 2014 will be a year where we are changing emphasis, to improve our returns and cash flow performance,” van Beurden said in a statement. Shell earlier this month issued a shock profit warning for the quarter to the end of December, detailing across-the-board problems just two weeks after van Beurden had replaced former chief executive Peter Voser. Shell is not the only big oil company struggling for profit growth. Its warning followed one earlier in January by Chevron Corp, the second-largest US oil company, and reflects how the industry is having to grapple with replacing reserves, lower oil prices and the need to control costs. Shell's capital spending will fall to $37 billion this year from $46 billion in 2013, it said, increasing the pace of asset sales and target disposals of $15 billion for 2014-15. The company will also take tough decisions on projects, cancelling this year's planned controversial and costly hunt for oil in Alaska's Arctic seas, in a u-turn of plans made as recently as December. Shell had spent around $4.5 billion searching for oil off the coast of Alaska since 2005 but was forced to cancel last year's Arctic offshore drill season after the grounding of a drillship in a storm in 2012 and against a backdrop of significant environmental opposition. “We are making hard choices in our world-wide portfolio to improve Shell's capital efficiency”, van Beurden said. The $15 billion of disposals targeted for this year and next would be equivalent to around 6.5 percent of Shell's current $228 billion market capitalisation and compared to proceeds from divestments of $1.7 billion in 2013. The company flagged it could also potentially look to make sales in its upstream America's division where weak gas prices in its shale portfolio could also lead to impairments. — Reuters
