Shell is aiming to become the most competitive and innovative energy company in the world, according to its latest strategy update, presented by chief executive officer Peter Voser in London today.
Voser said the company was on track to deliver its three-year strategic plan – outlined a year ago – and revealed that in this era of “volatile transitions”, Shell was in the throes of an ambitious phase of new growth investment, developing new sources of energy.
“We have made good progress in 2010. Our profitability is improving, and we are on track for our growth targets. There is more to come from Shell,” explained Voser.
In the first year of delivery against the three-year strategic plan, Shell saw some $10 billion, or 40% improvement in cashflow to $33bn, lower costs, higher oil and gas production, and continued progress with downstream restructuring – with Voser reaffirming continued commitment to the UK market.
Voser said cost reduction and operating efficiency were a key part of Shell’s business, to ensure profitability for its shareholders and competitive energy prices for its customers.
The company continues to sell non-core positions to enhance capital efficiency, and as part of funding for future investment. Asset sales proceeds have exceeded $30 billion in the past five years, and are expected to be up to $5 billion in 2011.
Downstream remains an important business for Shell, generating over $21 billion of free cashflow in the past five years, from a global portfolio. Voser said the company is redoubling its efforts to improve returns in downstream. The bulk of the 2010-12 asset sales programme in Downstream has been completed, with transactions since end-2009 reducing refining capacity by over 700,000 barrels a day, reducing its marketing footprint, and generating $4.7 billion of disposals proceeds, including the recently-announced disposal plans for UK refining and Africa marketing.
Voser said programmes to streamline the global downstream organisation were continuing, with more than $2.5 billion of cost taken out in 2009 and 2010, and a new target for a further $1 billion downstream cost reduction for 2011-12 announced.