Editorial: Sorry, did you say "Shell" or "Shelved"?
"Order and simplification are the first steps toward the mastery of a subject." Thomas Mann (1875 – 1955)
Yesterday, Anglo–Dutch supermajor Shell confirmed that it would be postponing its subsea compressor project for its Ormen Lange deepwater asset in the Norwegian Sea. The project vied to be visionary in scope, promising the prototype for a "rig-less" revolution for the offshore industry, starting with the field that supplies one fifth of the UK's gas.
However, according to Odin Estensen, chairman of the Ormen Lange Management Committee: "The maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible."
This project hiatus can be seen, in conjunction with recent shelved developments - for instance, its $20 billion gas-to-liquids plant in Louisiana - as part of the company's well-documented streamlining and global divestment drive.
In 2013, Shell's earnings nosedived by 39 per cent from $27.2 billion to $16.7 billion. Faltering shale developments had crippled the profits of its US upstream division and an overexposed refining business meant a host of "tough portfolio choices to improve the company’s overall competitiveness".
The cost of oil is further expected to decline in the coming years as fresh supply hits the markets from the likes of a previously blackballed Iran and the rise of conventional exploration costs seems inexorable. So, where does Shell see its core sustainable business in the coming years?
As the company pens a five-year deal to supply the tiny Gulf kingdom of Kuwait with 2.5 million tonnes of liquefied natural gas a year, and the largest ship ever constructed sits on the cusp of commission in the Timor Sea, is the key to Shell's future mastery simply a case of ordering its strengths?
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