Introduction from the CEO

Our relentless focus on performance, combined with higher oil and gas prices, helped us to increase our operating cash flow in 2017. Our $30 billion divestment programme for 2016-2018 also made good progress, including in Australia, Canada, Gabon and the UK. This reshaping of our portfolio is part of our ongoing effort to raise efficiency by reducing costs and concentrating on our most competitive businesses.

We maintain a “lower forever” approach to our cost management and will continue to closely control investment levels, while improving the quality of our portfolio through asset sales and new projects. We remain on track to deliver a wave of new projects which have a targeted delivery of 1 million barrels of oil equivalent a day (boe/d) or $10 billion cash flow from operating activities by 2018, at $60 per barrel (real terms 2016). Most of these projects are either already on-stream and ramping-up, or are close to completion. These projects will continue to ramp-up over 2019 and 2020. In fact, by 2020 we expect an additional $5 billion of operating cash flow from these projects and some new ones, all at $60 per barrel.

We expect our annual organic capital investment to remain between $25 billion and $30 billion until 2020. We see $30 billion as a ceiling, even if oil prices rise further, while $25 billion is not a floor – we may go below this.

Over the years ahead, we plan to continue showing leadership in the oil and gas industry while responding to society’s need for more and cleaner energy as the world moves to a low-carbon energy system.

Tackling climate change is a challenge for society – including businesses, governments and consumers. As the global population grows and living standards rise, it will mean society meeting increasing energy demand with an ever-lower carbon footprint. We will play our part. 

In November, we announced a net carbon footprint reduction ambition covering not just emissions from our own operations but also those produced by customers when they use the energy products we sell. We plan to do this in step with society’s drive to align with the Paris climate agreement. We aim to reduce the overall footprint of our energy products by around 20% by 2035 and by around half by 2050. This measure will be reviewed every five years to ensure progress is in line with wider society’s progress towards the reductions required to meet the Paris goals.

Our New Energies unit, which we created in 2016, invested in commercial opportunities linked to the energy transition in 2017. We acquired NewMotion, one of Europe’s largest electric vehicle charging providers, and UK home energy provider First Utility.

In a changing energy landscape, we will continue our focus on delivering strong shareholder returns and cash as we progress confidently along the path to becoming – and remaining – a world-class investment.

Ben van Beurden
Chief Executive Officer