Shell forecasts USD60 per barrel of crude oil by 2020

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Royal Dutch Shell said in its annual strategy outlook that it looks to target organic free cash flow has increased to $25 to $30 billion by 2020 at a Brent crude oil price of $60 per barrel.

This is $5 billion more than the outlook Shell provided during its capital markets day in June 2016.

Chief Executive Officer, Ben van Beurden, today updated investors on the company’s strategy, setting out plans to grow returns and free cash flow, and outlining its ambition to reduce the net carbon footprint of its energy products.

“Our next steps as we re-shape Shell into a world-class investment aim to ensure that our company can continue to thrive, not just in the short and medium term but for many decades to come,” said van Beurden. “These steps build on the foundations of Shell’s strong operational and financial performance, and my confidence in our strategy and our ability to deliver on the promises we make.”

Van Beurden highlighted three updates from his presentation: “We have increased our outlook for organic free cash flow, which has been consistently strong over the past five quarters. We have also made significant progress with our divestment programme, allowing us to reduce net debt in that time. Meanwhile, we intend to cancel our scrip dividend programme with effect from the fourth quarter 2017.”

The company also announced a net carbon footprint ambition covering not just emissions from its own operations but also those produced when using Shell products. “Shell aims to cut the net carbon footprint of its energy products – expressed in grams of CO2 per megajoule consumed – by around half by 2050. As an interim step, by 2035, we aim to reduce it by around 20%,” said van Beurden. “We will do this in step with society’s drive to align with the Paris goals, and we will do it by reducing the net carbon footprint of the full range of Shell emissions, from our operations and from the consumption of our products.”

Van Beurden concluded: “Taken together, these next steps, and the strategy and portfolio strength that underpin them, will deepen Shell’s financial resilience and competitiveness, help to ensure our long-term business relevance and keep us firmly on the path to becoming and remaining a world-class investment.”