Shell will cut its upstream oil business by 40%

As early as June of this year, Shell Oil Company planned to announce a major restructuring at the end of this year to reflect its 2050 net zero emission target.

In the second quarter earnings conference call at the end of July, CEO Ben van Beurden said: "The company has begun a redesign and reorganization plan to capture the core business from our traditional business in a simpler and more effective way. , Innovating future business models. In addition to reshaping and redesigning the asset portfolio, we will also adjust the scale as needed."

Two sources involved in the cost-cutting assessment said that Shell is considering cutting operating costs and capital expenditures for new oil and gas exploration and production projects to cut costs in its current largest department, the upstream department, by 30% to 40%. The Anglo-Dutch super-large oil company will focus on several key areas in the U.S. Gulf of Mexico, the North Sea and Nigeria to streamline its upstream business.

The source pointed out that Shell’s goal is to save capital to enhance its portfolio of renewable energy and power markets, so the natural gas sector and downstream sectors are also considering production cuts. A Shell spokesperson said: "We are currently considering a series of options and ideas and are currently carefully evaluating."

As the investment portfolio becomes more environmentally friendly, Shell has joined peers such as BP. BP stated in its new strategy last month that it will reduce oil and natural gas production by 40% by 2030 through active portfolio management and will not conduct exploration in new countries.