HARARE: Shell ditched a $6.5bn (£4.3bn) project in the latest sign of the broadening impact of falling oil and gas prices on the hydrocarbons industry.
In a statement on Wednesday, Shell said the decision to abandon the Al-Karaana petrochemicals project “came after a careful and thorough evaluation of commercial quotations from EPC (engineering, procurement and construction) bidders, which showed high capital costs rendering it commercially unfeasible, particularly in the current economic climate prevailing in the energy industry.”
International oil companies are cutting back on spending aggressively amid a brutal slump in oil prices. Brent has fallen 50pc since July to trade around $46 per barrel as Saudi Arabia and its close allies in the Organisation of the Petroleum Exporting Countries (Opec) seek to win back market share from producers outside the cartel.
Shares in Shell were down 2.5pc at £30.18 in London following the announcement. The Anglo-Dutch oil major remains a major investor in Qatar where it has assets including giant liquefied natural gas plants and facilities that convert gas into motor fuel.
Earlier, Premier Oil had warned the market that it could face a $300m hit to its finances from falling prices. The Telegraph revealed this week that UK-listed Tullow Oil was preparing to cut jobs across the business in the first quarter in response to the downturn.