Royal Dutch Shell is looking to slash up to 40% off the cost of oil and gas production in order to invest heavily in the energy transition, according to Reuters.
This new cost-cutting initiative is known as “Project Reshape” and is expected to come to fruition at the end of 2020. The project is aimed at streamlining the company’s three main divisions.
A spokeswoman for Shell said in a statement, “We are undergoing a strategic review of the organization, which intends to ensure we are set up to thrive throughout the energy transition and be a simpler organization, which is also cost-competitive. We are looking at a range of options and scenarios at this time, which are being carefully evaluated.”
As of 2019, Shell’s overall operating costs came to $38 billion and capital spending totaled $24 billion. It is now expected that Shell will reduce spending on oil and gas production by 30% to 40% through cuts in operating costs and capital spending on new projects.
Furthermore, there will be more of a focus on a select few oil and gas production hubs, including the Gulf of Mexico, Nigeria, and the North Sea.
The company’s gas division is also looking at deep cuts.
This move comes after a wave of investment in the renewable sector from a number of large IOCs, including BP and Eni, as the fight for renewable market share intensifies.