ROYAL Dutch Shell chief executive Ben van Beurden has said the company sees growth opportunities in the North Sea as he underlined the importance of its recent decision to revamp a giant field off Shetland.
Speaking after Shell revealed fourth quarter profits more than doubled to $4.3bn (£3bn), Mr van Beurden indicated the decision to redevelop the Penguins field marked a turning point following years of retrenchment for the firm in the North Sea.
“Until then of course a lot of the focus in our activities in the North Sea had understandably been on divesting and getting out of a significant portion of our assets … it’s very good to be able to say well that’s not everything we want to do in the North Sea,” Mr van Beurden told reporters.
He added: “We remain committed to the UK, we remain committed to the North Sea and we see more opportunities to grow going forward.”
Mr van Beurden’s comments will be welcomed in the North Sea oil and gas industry, which has been through a huge shake up amid the sharp fall in the crude price since 2014.
Shell has shed more than 1,000 North Sea jobs and sold off a raft of older fields. The company agreed in January last year to sell a big portfolio to private equity-backed independent Chrysaor for up to $3.8bn, and booked a $1bn profit on the deal.
Other oil firms have made similar moves, resulting in thousands of job losses in the North Sea. Many fields have come under the control of new owners who probably decided to invest in the area in the expectation the oil price cycle would turn in their favour.
The increase in Shell’s annual profits reflected the rise in the oil price during last year, which followed moves by major exporters to limit production to support the market.
“We see there’s a lot of rejuvenation going on in the North Sea, we see much more running room and to underline that to take a final investment decision on Penguins was important for us to do as well. There’s more to come,” Mr van Beurden said.
The Dutch executive said the company remained a major producer in the North Sea.
He highlighted Shell’s interest in the West of Shetland area, where it has invested heavily in developing giant fields such as Clair Ridge with BP.
“We are investing somewhere between six to nine hundred million pounds in the North Sea for the next two or three years or so, that’s very much West of Shetland,” Mr van Beurden noted.
On Wednesday BP announced that it had made what may be a big find West of Shetland. It drilled the well with Shell, which has not commented separately on the success.
Shell has just made what it reckons is a major discovery in the Gulf of Mexico, a key growth area.
Mr van Beurden said the 2017 results showed the company was making good progress with a strategy that has involved focusing investment on giant projects that offer good growth prospects.
“We showed we have what it takes to deliver a world-class investment case,” he said.
He highlighted Shell’s plans to invest up to $2bn annually in the new energy market, in areas ranging from renewable energy generation to the sale of electricity to consumers.
The company will maintain efforts to boost efficiency as it looks to support increased distributions to shareholders.
Directors reiterated its intention to make $25bn share buy backs by the end of 2020.
Mr van Beurden said the firm was obsessed with starting the buy back programme without specifying a date.
Shell cancelled its scrip dividend programme in the fourth quarter in favour of an all-cash payout.
The company made $15.8bn profit on a current cost of supplies basis in 2017 net of one-offs, up 120 per cent from $7.2bn last time.
Fourth quarter profits increased 140 per cent, to $4.3bn from $1.8bn.
The fourth quarter dividend was held at 47 cents per share.
Shell employs around 1,500 people in its North Sea operations including 1100 based in Aberdeen.
In November 2016 the firm said it would close its accounts centre in Glasgow, putting nearly 400 posts at risk.
Royal Dutch Shell A shares closed down 56p at 2406.5p following a strong run.
Steve Clayton, a fund manager at Hargreaves Lansdown, said: “Shell’s overall financial position is much improved from the dark days of 2015.”
He said the firm had emerged leaner and healthier after a period of intense pressure for the energy sector.