None of the oil majors are being spared by the precipitous fall in oil prices since mid-2014. Shell's plunge in profits was particularly steep—from US$19bn to US$3.8bn—as it wrote down several assets in its upstream business, notably in the US shale sector, the Arctic and in Canadian oil sands.
The announced spending reductions—including reduced investment and some 10,000 job cuts—are only partly a result of this. They also form part of the company's broader strategy following its acquisition of the UK's BG Group, which will become effective this month. Although this purchase reinforces Shell's reserves position and will boost its market share in LNG, the hefty price paid requires some painful streamlining in the near term.