Oil giant Royal Dutch Shell has announced plans to heavily cut operating costs and spending proposals to help mitigate the impact of the coronavirus outbreak and tumbling oil prices.
The company said it will reduce its operating costs by 3 billion to 4 billion US dollars (£2.6 billion to £3.4 billion) for the next 12 months.
It said it will also reduce its annual spending to a maximum of 20 billion dollars (£17.1 billion) for 2020 from its previous expectations of 25 billion dollars (£21.4 billion)
Shell said there will also be a material reduction in working capital as it said the actions are intended to “reinforce the financial strength and resilience” of the business.
As #COVID19 continues to impact people’s lives and global markets, we are putting the safety and health of our staff and customers first.
— Shell (@Shell) March 23, 2020
Shares in the company have more than halved in the past two months as oil prices have continued to dive on the back of travel restrictions and tensions between Russia and Saudi Arabia.
Shell said its cost-cutting plans are expected to improve cash flow by between 8 billion and 9 billion dollars (£6.9 billion and £7.7 billion) before tax.
The company board added that it will not go forward with the next stage of its share buyback programme.
Chief executive Ben van Beurden said: “As well as protecting our staff and customers in this difficult time, we are also taking immediate steps to ensure the financial strength and resilience of our business.
“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.
“In these very tough conditions, I am very proud of our staff and contractors across the world for maintaining their focus on safe and reliable operations while also ensuring their own health and welfare and that of their families, communities and our customers.”