Shell, BG combine stronger and better off financially to battle market changes – Holliday

retail-site-usa_6280287836_o-1.jpg

Photo Courtesy: Royal Dutch Shell

 

Shell said its acquisition of the BG Group – one of the largest takeovers in the UK corporate history – will help the global giant sharpen its focus on liquefied natural gas (LNG) and deep-water exploration and production.

“Combined, we are stronger, more competitive and better-equipped financially to continue to play an important role in meeting global energy demand for decades to come,” Chairman Chad Holliday said in remarks published in the company’s latest annual report.

It underscores our role as one of the largest independent oil and gas producers. Increased cash flows from our newly acquired assets will also help to support dividend payments and future investment, Holliday said.

The chairman called 2015 a “turbulent year”, with low oil and gas prices having a far-reaching impact on the energy industry, but added that Shell had strengthened its business by reducing operating expenses and capital investment, while continuing to divest assets that are not central to its long-term strategy.

According to Holliday oil and gas, which make up over 50% of global energy supplies today, will need to continue to provide a large part of the world’s energy for decades to come.

The International Energy Agency estimates that over $25 trillion of investment will be needed in oil and gas supply alone from 2015 to 2040.

“So the long-term investment case for oil and gas remains strong, despite the fall in oil prices over the last 18 months. The concern is that prices seen in late 2015 and early 2016 may be too low to spur investment in projects that are needed to ensure long-term supplies,” he said.

 

 

Leave a Reply

Your email address will not be published.