Shell reins back spending in the US

Shell will slash spending on US oil and gas production by a fifth this year as part of a drive to improve its performance that will also see the group dividing its business into 150 “performance units” across the world.

In the first shake-up since Ben van Beurden took over as chief executive from Peter Voser at the start of the year, Shell will reduce US onshore spending and redirect much of the remainder from shale gas into oil and “liquids-rich” shale.

It will also group together assets such as integrated refineries or clusters of oil and gas fields in similar geology into performance units so that their performance can be monitored more closely. The units will have no head and will not change the structure of the company but rather have been created purely as a way to judge performance, a spokesman said.

The shake-up was announced as it unveiled its annual report, revealing that Voser took home €8.4 million (£7 million) for his work last year even though Shell issued a profits warning in January just after his departure.

However, the total salary and bonus payout package was less than half the €18.2 million that he pocketed in 2012.

Shell’s shock profit warning at the start of the year was swiftly followed by a 71% drop in fourth-quarter profits to $2.1 billion (£1.3 billion) as the group suffered impairment charges on its US shale oil and gas operations and costs relating to disruption in Nigeria.

Van Beurden said: “With sharper accountability in the company, this [new] approach will target growth investment more effectively, focus on areas of the business where performance improvement is most required, and drive assets sales from non-strategic positions.”