Arctic to be kept on ice by Shell

sHell’s new boss has put controversial arctic drilling plans on hold and vowed to slash spending after the oil giant was rocked by its first profit warning in a decade.

Ben van Beurden said europe’s largest company by revenue would be ‘ changing emphasis’ after a tough year that saw pre-tax profits slump 23pc to £15.3bn.

‘None of us at shell are comfortable with these results,’ he said, admitting that ‘we’ve lost momentum and can sharpen our performance in a number of areas’.

Van Beurden’s plan will see spending hacked back from the £28bn of last year to £22.5bn in 2014 – largely by making fewer acquisitions and launching a £9bn twoyear asset sale programme.

the Dutchman has also shelved plans to drill for oil in alaska for the second year in a row and refused to rule out abandoning shell’s arctic ambitions altogether.

He said the company was ‘ frustrated’ by a Us court ruling that threw the validity of its exploration permits into doubt, making it ‘impossible to justify’ trying to drill this summer.

In another break with the reign of predecessor Peter Voser, who stepped down on January 1 to pursue a ‘change of lifestyle’, he abandoned targets the company had set to measure performance.

shell missed production goals last year and van Beurden said he would no longer set concrete targets for cash flow and net spending.

shell’s shares rose 22p to 2147.5p as investors, many of whom have called for lower spending, took heart from van Beurden’s strategic shift.

Oil pundit Malcolm Grahamwood welcomed the approach, saying shell’s shares could yet hit £25.

‘It’s a new era for shell and whilst you don’t change something this big overnight the signs are that Ben van Beurden has gauged the mood of the market and decided that action like this is mandatory,’ he said.

But van Beurden warned that the pain may not be over, saying it was possible that shell would make new writedowns on its North american operations.

the Us was among the factors that dented this year’s performance, as shell continued to feel the effects of a shale gas glut that has sent prices tumbling.

Its North american arm is likely to be restructured, with some of its assets there to be put up for sale.

Nigeria has been another thorn in shell’s side, with its onshore operations also on the block, having been blighted by years of oil theft, pipeline vandalism and spills.

Finance director simon Henry said this had cost shell £33m and 40,000 barrels a day in the fourth quarter compared to last year.

Van Beurden said Nigeria was causing shell the ‘most headaches’ of any region in its portfolio, admitting that it was ‘a complex situation that we simply cannot resolve’.

there had been speculation that shell might buy its way into UK shale gas, after French firm total invested in ‘fracking’ firms planning to extract Britain’s reserves.

But the shell boss ruled this out, saying that ‘we don’t see UK shale gas ranking high enough for us to justify getting into it’.

Production during 2013 reached 3.2m barrels a day, a 2pc decline on last year, as the company was hit by unexpected maintenance shutdowns.

this was among the key factors that hit profitability, with large chunks of high-margin areas such as the North sea and Nigeria out of action.

shareholders are in line for a firstquarter dividend of $0.47 per share, up more than 4pc compared to the payout in the same period last year.