Falling oil prices are forcing Royal Dutch Shell to cut back investment by some $15bn over the next three years.
Shell also said profits for the last three months of 2014, had risen to $4.2bn compared with $2.2bn in the same period a year earlier.
Full year earnings also rose to $19bn in 2014, up from $16.7bn in the previous year.
The company said it had sold some $15bn in assets over the last year before the markets had weakened.
Shell chief executive Ben van Beurden said: “We are taking a prudent approach here and we must be careful not to over-react to the recent fall in oil prices.
“Shell is taking structured decisions to balance growth and returns.”
As the first of the major oil companies to report its figures for last year, Shell plays the role of the canary in the coal mine – or on the oil rig.
After a rather sickly 2013, profits are actually up.
But the impact of the low oil price is clearly biting. The company announced that it would be cutting investment over the next three years in new exploration and the development of oil and gas fields, a move that will raise fresh concerns about its business in the North Sea.
Last summer Shell announced the loss of 250 jobs in Aberdeen.
The chief executive, Ben Van Beurden, said that the company would not “over-react” to the oil price which has fallen by 60% since last June.
And of course a low oil price means lower prices at the petrol pumps for consumers.
He said though that Shell would look at further cuts if necessary.
As well as the North Sea, the company’s operations in Nigeria, where it recently paid a £55m bill to clean up pollution, and the Arctic will also come under increased scrutiny.
Profits for the period after stripping out one-off items, such as asset sales and accounting changes, still showed a rise of 12% to $3.26bn.
Shell announced dividends of $12bn in 2014 and repurchased $3.3bn of its own shares.
The group said it had slowed the pace of share buybacks to conserve cash and that near term oil prices would dictate how it progressed.
Oil prices have fallen by almost 60% since June because of weak global demand and a boom in U.S. shale production.
Shell’s main rivals, BP and Total have also announced large cutbacks in capital expenditure in recent weeks.
Source: BBC News
