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Shell says it's ready for change

Company says it needs to adapt or die in an evolving energy landscape.

By Daniel J. Graeber
Royal Dutch Shell said it was retooling its strategy to adapt to a volatile energy market undergoing a shift toward more low-carbon and cost-efficient options. File photo by Brian Kersey/UPI
Royal Dutch Shell said it was retooling its strategy to adapt to a volatile energy market undergoing a shift toward more low-carbon and cost-efficient options. File photo by Brian Kersey/UPI | License Photo

THE HAGUE, Netherlands, June 7 (UPI) -- Royal Dutch Shell is positioning itself as a stronger company as it moves through the market downturn and changing energy landscape, the CEO said Tuesday.

"I see important opportunities for Shell from the substantial and lasting changes underway in the energy sector," CEO Ben van Beurden said in a statement.

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Shell said it was leaving oil and gas operations in as many as 10 countries, while focusing more heavily on gas-rich Australia and shale opportunities in the United States. Van Beurden said an energy market characterized by high volatility and low-carbon advances meant profound changes were necessary to survive.

"We expect to see robust demand for oil and gas for decades to come, in a global energy system in a long-term transition to lower carbon fuels," he said. "As well as low oil prices today, we are seeing higher levels of price volatility, due to geopolitical change, the speed of information flows, and the pace of innovation in our sector."

British energy company BG Group became a unit within the corporate structure of Royal Dutch Shell in early February. The $7 billion tie-up was the largest of its kind since Exxon and Mobil joined forces in the 1990s, but resulted in heavy staffing cuts across the board.

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After the deal closed, Shell said it was closing some of the offices in the United Kingdom for BG Group as both companies move forward under a united structure. Paul Goodfellow, a regional vice president for Shell, said from Aberdeen last month that at least 2,200 additional jobs would be cut as the combined strategy evolves under a strategy to reduce overall costs.

Shell in early May published its first earnings report of the year since closing on the deal, saying it paid off in terms of output, which is up roughly 15 percent compared with last year. Cash flow for the combined entity increased by $800 million.

Although the combination with BG Group resulted in widespread redundancies, Shell said combined costs would move lower by about $4 billion for the year.

"The BG deal is an opportunity to accelerate the re-shaping of Shell," van Beurden said.

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