Royal Dutch Shell's plans to sell off assets and pull out of up to 10 countries are on track, the oil major's chief executive told CNBC on Tuesday, putting to bed rumors of a spin-off of non-core assets into a "Baby Shell."
On the company's capital markets day in London, Shell in a statement said that it was taking action to deliver on lower costs, lower spending. asset sales and "profitable new projects."
In terms of asset sales, the company confirmed these were expected to total $30 billion for the 2016-2018 period.
The company added that it had "earmarked up to 10 percent of Shell's oil and gas production, including 5 to 10 country exits, for disposal." Shell expected to "make significant progress on the first $6 billion-$8 billion of this program in 2016."
Shell Chief Executive Ben van Beurden told CNBC that there was plenty of interest in the assets from buyers, dismissing speculation to the contrary. "No, I think we have a lot of interest from a very wide universe of buyers which we are engaging with...but the buyers are there."
"It is a crowded market but I'm not worried. The $30 billion of asset sales is pretty much on the cards and I don't feel we need to have an update on that today."
He reiterated that the asset sales program was an important part of the company's overall strategy but the divestment would be done in a "value-driven rather than a timetable-driven way."
Van Beurden said speculation that the group was going to spin off its more mature, non-core assets in a what has been dubbed a "Baby Shell" IPO was unfounded.
"I think this was something created out of nowhere. I'm not ruling out anything in the longer run of course but it wouldn't do the trick for us. Having an IPO wouldn't really release the value of these assets in a way that helps you in your financial framework."
"The preference (for us) is to just to make sure that we take a number of assets that are more attractive for other types of operators...that we concentrate our portfolio on the higher-quality assets that fit our strategy better. So selling is more important than floating."
As well as asset sales, the company said that capital investment would be in the range of $25 billion-$30 billion each year to 2020 as the company looks to improve capital efficiency and "ensure a more predictable development funnel for new projects."