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Shell cuts back on fracking to fund renewable energy drive

The international oil giant will cut about 40pc of overheads including staff…

Shell cuts back on fracking to fund renewable energy drive

The oil giant is seeking to free up investment for early-stage carbon capture and hydrogen projects

Falling oil and gas prices due to the pandemic have taken the shine off many assets and triggered heavy write-downs.

Shell is making deep cuts in its fracking business as it tries to free up cash to cope with the pandemic and invest in renewable energy.

The international oil giant will cut about 40pc of overheads including staff in the US-focused shale oil and gas division by early 2021.

The business includes seven projects in the US, Canada and Argentina, including in the core shale region of the Permian Basin, Texas.

Shell along with other oil majors such as Exxon, Chevron and BP has looked to US shale as a source of growth in recent years, but falling oil and gas prices due to the pandemic have taken the shine off many assets and triggered heavy write-downs.

The FTSE 100 company launched a $9bn (£7bn) cost-saving drive across the entire business in March to help cope with the pandemic. Keeping shale costs low has always been key given the rapid rates of drilling required to maintain output.

Shell is also seeking efficiencies as it tries to adapt to the global push towards lower-carbon sources of energy, freeing up investment for early-stage carbon capture and hydrogen projects.

It announced plans in July to cut its carbon emissions to net zero, going further than many by including emissions generated by customers.

Boss Ben van Beurden has signalled a “complete overhaul”. Wael Sawan, Shell’s director of upstream, told City analysts recently there was less capital available for production, with shale particularly affected, and he expected the approval of projects to slow down.

In July, Shell sold its Appalachia shale assets to the National Fuel and Gas Company for $541m as it focuses on core higher-margin assets.

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