Royal Dutch Shell will not gear up its divestment strategy in lieu of lower margins as oil prices continue to decline, said the company’s Upstream International Director on Tuesday.
“We certainly don’t think divestments this time is necessarily the right approach,” Andy Brown told reporters on the sidelines of the Abu Dhabi International Petroleum Exhibition Conference.
Shell sold $11.6 billion in the third quarter as part of its 2014 divestment strategy to raise $15 billion. Brown said the company is not diverting from its current strategy to bolster cash flow despite a more than 25 per cent decline in the price of Brent crude, a global market indicator, since June.
“We have a programme of divestments that we announced [and] we continue to go through that cycle,” he said.
Falling oil prices have raised questions for oil firms around the world on the viability of their current and future capital expenditure projects. On Tuesday, Brown said it is “business as usual” at Shell, which he said remains focused on completing its tabled projects.
“We test all our projects against $70 and $110 a barrel so the current oil price is in the range,” he said, however, declined to comment which projects would be the first to be cut if weak prices continue.
Brent edged closer to the $80 a barrel market at afternoon trade on Tuesday UAE local time, down 0.73 per cent to $81.74.
“What we don’t do is turn on and turn off our capital investment programme. We are long term investors and oil prices go up and down,” said Brown.
While Brown said Shell believes that oil prices are set for a correction, it will also not increase investments under the current climate.
“We are certainly not looking to ramp up investment we are looking to continue to constrain investment but still invest at a regular level,” he said.