Shell disappointed by North Sea operations

SHELL’S NEW chief executive yesterday admitted the company’s North Sea operations were “disappointing” last year, and hinted that more assets could be sold off.

Ben van Beurden, who took over as CEO at the Anglo-Dutch major at the turn of the year, said too much oil had been lost due to unplanned maintenance work on its operations across the UK Continental Shelf.

The company refused to rule out selling further North Sea assets over the next two years.

“High maintenance is a fact of life but we have to be honest: the North Sea has disappointed in 2013,” said Mr Van Beurden.

“We need to arrest the decline as we have in Oman.”

Last month the company announced plans to sell three of its North Sea fields as part of a planned £9 billion asset disposal over the next two years.

The Anasuria, Nelson and Sean fields were put on the market, and chief financial officer Simon Henry said the company was continuing to review its assets.

“We have to look at our asset integrity — which assets justify ongoing investment and which receive increased investment to sustain life,” Mr Henry said.

“Quite a few are at the margins of cost.”

Mr Van Beurden praised the findings of Sir Ian Wood’s industry review, and said North Sea operators would need to work closer together in future.

“I think Sir Ian did a very good job analysing what the future is on the UK Continental Shelf,” he said.

“Extending the life of the UK Continental Shelf can’t be a bad thing at all.”

The company confirmed it was also planning to cut spending on its US upstream operations by a fifth this year and exit some poorer-performing sites as it changed its approach to the shale gas market.

“Shell has a strong asset base and industry leadership in many of its growth themes,” said Van Beurden.

“While this position of strength gives confidence for the future, it is also clear that we need to get a tighter grip on performance management in Shell.

“I am determined that, by focusing sharply on our three key priorities — better financial performance, in particular in our upstream Americas and downstream businesses; enhanced capital efficiency; and continuing strong project delivery — we will continue to grow our cash flow and improve our returns.”

The firm is to restructure its downstream operations after the success of its chemicals and biofuels businesses was hampered by the ongoing decline of the refining market.