Chief executive Ben van Beurden says group will press ahead with $30bn asset sales and $3bn spending cuts as second quarter profits fall 35%

Shell sees no quick end to the slump in oil prices and plans to further slash annual spending, sell off assets and bring the total number of job cuts to 6,500 by the end of 2015.

But the Anglo-Dutch group has vowed to press on with its expensive and controversial exploration programme in Arctic Alaska, saying it was a “long-term play” that could not be influenced by current energy prices.



Capital expenditure will be reduced by a further $3bn (£1.9bn) meaning a fall of 20% overall across 2015 compared to last year while more than $30bn assets are to be disposed of by 2018 once its takeover of BG is complete.

The company insisted its planned £47bn merger with rival BG was still a good bet as it would help Shell be more competitive whatever crude’s value.



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Ben van Beurden, Shell’s chief executive, said: “We have to be resilient in a world where oil prices remain low for some time. We have to be an attractive and resilient company at today’s oil price, no matter how long this oil price will continue. We are acting with determination and urgency.”

He was speaking after reporting that second quarter profits had slumped 35% to £3.36bn year on year and capital expenditure in exploration and production would fall 20% in total in the current financial year.

Van Beurden said Shell was on track to complete the BG takeover next year and the combined group would see $30bn of assets hived off between 2016 and 2018.

He said he wanted Shell to follow a “grow to simplify” strategy concentrating on fewer but higher value projects. But van Beurden said the company was committed to pursuing its Chukchi Sea exploration in the Arctic, despite having spent $7bn with no financial return so far.

He batted away suggestions at a results conference that such a high-cost project could not make sense with oil prices at their current levels of $54 per barrel, compared to $115 last June.

Van Beurden said: “It’s a long-term play with a very, very significant resource potential. The prospect we are about to drill this season, the Burger prospect, will have the potential to be multiple times larger than the largest prospects in the Gulf of Mexico.”



He said that funding was committed for this year and most of 2016, which made the project inflexible: “You cant turn it off and on whenever you feel like it.”

Earlier this year, Shell unveiled 250 job cuts in Aberdeen, but said the number has now moved to 500 with a further 250 in the Norwegian sector of the North Sea. By the end of 2015 the cumulative total of all job cuts so far will be 6,500 - including contract staff - but Shell said it was too early to say how many more would go as spending is further reduced and more assets are sold.