Downstream Changes at Shell

photo : icnetwork.co.uk

Following  relatively weak 4th quarter 2009 results, Shell has commented on the need for further downstream changes in order to improve company performance

Commenting on the results, Shell CEO Peter Voser noted that Shell's fourth quarter was impacted by the weak global economy. He noted that oil prices had increased compared to a year ago but gas prices and refining margins had declined sharply, because of weaker demand and high industry inventory levels.

Shell's assumption is that there won't be a quick recovery, and the outlook for 2010 will remain uncertain. As a consequence, it has sold a number of downstream assets and closed a refinery in Montreal, Canada. A number of other cost cutting initiatives are either underway or being actively considered, including further downstream divestments and a major downstream cost reduction programme.

The assumption that the recovery will not be rapid means that Shell is taking decisive action to position itself for the coming years. The assumption is equally valid for chemicals manufacturers. Actively planning for this scenario, whilst retaining the ability to be innovative and flexible, will be the key to future success, whereas batoning down the hatches and trying to ride out the storm will only lead to difficulties.

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