LONDON: Royal Dutch Shell said yesterday it was cutting spending on American upstream by a fifth this year after losses in resources plays such as shale in yet another step by an oil major to reduce exposure to the booming industry.
Oil and natural gas pumped from North American shale has boosted the fortunes of smaller energy firms, but the world’s biggest oil companies, including Exxon Mobil, have been slower to realise the full potential of the prolific rock. “Shell is shrinking this portfolio and cost base, with 2014 spending to be reduced by 20 percent compared to 2013, and redirecting onshore investment to the lowest cost gas acreage with the best integration potential, and into on-going exploration in liquids-rich shales,” Shell said.
In North America, the oil companies have broad exposure to profit-sapping natural gas, a commodity that fell to the lowest level in a decade in 2012 but has since rebounded as a cold winter depleted gas in storage.
Sentiment about the fuel’s prospects is improving with the prospect of LNG exports and increased industrial use. Reuters
