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Shell cuts costs, slashes spending on virus turmoil

March 24/2020

MOSCOW (MRC) -- Royal Dutch Shell said Monday it will slash costs and capital expenditure by billions of dollars due to the worsening coronavirus pandemic, which has sparked an oil price collapse, reported The Business Times.

The Anglo-Dutch energy major announced in a statement that it will axe operating costs by USD3.0-4.0 billion over the next 12 months, and will reduce its annual spending to USD20 billion from USD25 billion.

"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," said Chief Executive Ben van Beurden.

"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."

Shell added in the statement that it was taking "decisive action to reinforce the financial strength and resilience of our business so that we are well-positioned for the eventual economic recovery".

As MRC wrote before, the COVID-19 outbreak has led Shell Chemical to temporarily suspend construction on the massive plastics and petrochemicals site it's building in Monaca, Pa. Shell began construction in Monaca, near Pittsburgh, in late 2017. The 386-acre project will be the first US petrochemicals project built outside of the Gulf Coast of Texas and Louisiana in several decades. Production is expected to begin in the early 2020s. The complex will use ethane from shale gas produced in the Marcellus and Utica basins to make around 3.5 billion pounds of polyethylene resin per year. The complex will include four processing units, an ethane cracker and three PE units. Most of the resin made in Monaca is expected to be sold to Shell customers within North America.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
Author:Margaret Volkova
Tags:PE, LLDPE, HDPE, ethylene, petrochemistry, Shell, Russia, USA.
Category:General News
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