In our downstream engine, our emphasis remains on sustained cash generation from our existing assets and selective growth investments.
This will be delivered by: developing and sustaining competitive advantage through advantaged feedstock and supply; improving our footprint; differentiated products and customer offer; and a distinguished brand.
These advantages are enabled by our diverse world class professionals and competitively advantaged technology, and underpinned by leading HSSE performance, operational excellence, competitive costs, capital discipline and project delivery.
Shell’s upstream engine focuses on cash generation from our mature basins. Focused exploration, licence renewals and the application of Shell’s advanced technology will all contribute to extending the life of these assets in a safe and responsible manner.
Our positions in Europe, south-east Asia and some of the Middle East are included in the upstream engine and should underpin the financial performance of our upstream businesses to the end of the decade.
Shell is the leading international oil company in integrated gas, which comprises LNG and GTL. Integrated gas generated earnings of around $9 billion in 2013 (about 45% of our total group earnings) and cash flow from operations of $12 billion (about 30% of the group total).
We have 26 million tonnes per annum (mtpa) of LNG capacity on-stream today and we expect it to increase by around 30% to almost 35 mtpa once the Gorgon, Prelude and MMLS LNG (Elba) projects are on stream. Over the same period, our directly managed sales volumes will rise to be over 50% of our total, from around 40% in 2013. We are increasing our trading and arbitrage plays in the global LNG portfolio, adding more value to the bottom line in this important growth business.
Shell is one of the industry’s pioneers in the deep-water oil and gas business with some 310 thousand boe/d of production in 2013, and a strong growth outlook.
We have eight key projects under construction, in Brazil, the Gulf of Mexico, USA, Nigeria and south-east Asia. We focus on standardising development concepts. For example, in the deep waters of the Gulf of Mexico, Shell pioneered tension-leg platform developments at the Auger field in 1993. In February 2014, we started production from the Mars B development through the Olympus platform (Shell interest 71.5%), our sixth, and largest, tension-leg platform in the Gulf of Mexico.
In addition to this production and development portfolio, Shell has built up new resources potential with deep-water frontier exploration positions in a number of countries worldwide. These basins could become growth hubs for Shell in the future.
Hydraulic fracturing technologies have opened up an exciting new resources base for the industry and Shell intends to be a leading player in this area.
We currently have positions in resources plays – tight gas and shales – in 12 countries. Our production today is dominated by North American gas and liquids-rich plays, with exploration and appraisal activities in a number of basins worldwide. We are restructuring and redefining our growth plans for North America including portfolio and spending reductions, a focus on the sweet spots and gas monetisation opportunities.
This strategic theme covers the Arctic, Iraq, Kazakhstan, Nigeria onshore and heavy oil plays. In these areas, Shell has access to large resources positions – typically in oil – but there are surface issues that can slow the development pace. These include community and government relations, security of staff and evolving local fiscal and environmental regulations. We are in these provinces for their long-term potential and we expect to see a measured development pace.
In Nigeria onshore, we are restructuring the Shell portfolio and are in the process of an asset sales programme that will result in an onshore portfolio increasingly focused on the gas value chain.