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* Aims to cut $3 bln to $4 bln in costs
* Suspends $25 bln share buyback
* Shares down 3.5%
* FACTBOX on oil companies cutting spending
By Ron Bousso
LONDON, March 23 (Reuters) - Royal Dutch Shell will
lower spending by $5 billion and suspended its vast $25 billion
share buyback plan in an effort to weather the recent collapse
in oil prices, it said on Monday.
The Anglo-Dutch oil major said it would reduce capital
expenditure to $20 billion or below from a planned level of
about $25 billion while seeking to reduce operating costs by an
additional $3 billion to $4 billion over the next 12 months.
The cuts are expected to boost Shell's cash generation by
between $8 billion and $9 billion on a pretax basis.
Shell's shares were down 3.5% in early London trading,
against a 3% for the broader European energy sector
Oil prices have crashed by more than 60% since January, hit
by global demand destruction because of the coronavirus pandemic
and a price war between top producers Saudi Arabia and Russia
after this month's collapse of a supply pact between the
Organization of the Petroleum Exporting Countries (OPEC) and its
allies.
The Shell cuts mirror moves by rivals such as Exxon Mobil
, Chevron, BP and France's Total
, who have all announced plans for sharp reductions in
spending.
Shell Chief Executive Ben van Beurden in January said that
the company requires $20 billion of its capital spending to
sustain operations at current output levels, with additional
spending dedicated to growing its business, including $2 billion
to $3 billion for building up its power and low-carbon energy
business.
All of Shell's business segments are reviewing spending to
achieve the targeted cuts, a company spokeswoman said.
"The combination of steeply falling oil demand and rapidly
increasing supply may be unique, but Shell has weathered market
volatility many times in the past," van Beurden said in a
statement.
Even before the coronavirus outbreak, Shell faced weaker
revenue because of slowing demand for petrochemicals, which led
it to slow its $25 billion three-year share buyback programme
late last year.
Shell has so far purchased $15.5 billion of shares since the
buyback programme started in July 2018, it said.
"We will continue to review the dynamically evolving
business environment and are prepared to take further strategic
decisions and consider changes to the overall financial
framework as necessary," the company said.
(Additional reporting by Muvija M in Bengaluru
Editing by David Goodman)
