Shell's new boss, Ben van Beurden, heaped criticism on his company yesterday and pledged a new approach to the way it does business – by slashing spiralling costs, selling unprofitable assets and freezing its troublesome US Arctic drilling programme.
As he announced a 71 per cent dive in fourth-quarter profits to $2.1bn (£1.3bn), Mr Van Beurden said Shell is looking to sell about $15bn worth of businesses over the next two years. It will also cut its capital spending by $9bn, from $46bn last year to $37bn in 2014.
Mr van Beurden, who took the chief executive's reins from Peter Voser at the start of the month, said: "Let me be very, very clear … if Peter Voser was here, we would have exactly the same results, exactly the same announcements."
The City applauded Shell's recognition that things need to change, as spending spirals out of control and a series of problems across the group take chunks out of its profits.
"We haven't always made the right capital choices," Mr van Beurden admitted, adding that "we got a little bit ahead of ourselves in some of the longer-term plays."
In other words, Shell has spent far too much money piling into some businesses that weren't really worth it.
Mr van Beurden plans to sell some of Shell's US shale gas operation, which prompted a $2bn writedown last year on the back of falling gas prices, after the company stampeded into a booming industry that has since lost momentum.
Shell also expects to sell "downstream" businesses, such as petrol forecourts and refineries, that have been hit hard by rising competition from super-refineries in Asia and the Middle East.
Mr van Beurden raised the prospect of selling at least some of Shell's onshore oil business in Nigeria, which has suffered badly in recent years as criminals have siphoned off oil from the pipes. And he warned that further writedowns relating to the company's US shale gas and Arctic exploration programmes were likely and problems in Nigeria expected to continue.
The City's broad welcome of these steps was sweetened further by the announcement of a 4 per cent dividend rise for this quarter and a promise to continue Shell's share-buyback programme, worth $5bn last year. However, the increase in the share price, up 24p to 2,266.5p, was fairly muted given the importance that Mr van Beurden seemed to attach to his announcements, as analysts suggested Shell's action may not have gone far enough.
"It's a step in the right direction but it's very early days and, without further details, I'm going to withhold judgement," said Iain Pyle, an analyst at the financial research firm Sanford C Bernstein.
"The capital expenditure target is only for one year and they haven't given a target for returns. We've yet to see the outcome of its review of the downstream assets and we don't know which assets they are going to sell," Mr Pyle added.
Neil Shah, an analyst at Edison Investment Research, said: "Shell's new CEO will have reassured investors by addressing the issue of cost overruns head-on, but it will take until the second half of 2014 to see if his measures need to go further."
Declaring that 2014 would be a year of "changing emphasis", Mr van Beurden said he would continue pushing Shell hard into liquefied natural gas (LNG) in countries such as Qatar and Australia, as well as deep-water oil exploration projects in the Gulf of Mexico, Brazil and Malaysia.
LNG is gas that has been liquefied by freezing it to 1/600th of its normal size for long-distance export, and it is a fast-growing market in which analysts say Shell is "best in class".
Shell is not alone in its struggles in a sector characterised by rising costs, weakening refining margins and frequent disruptions to production in nations where there are unstable regimes. The US oil giant Chevron issued a profit warning, blaming competition in refining, as did BG Group this week as the old exploration arm of British Gas continued to suffer from the military coup in Egypt. However, as Mr Pyle noted, Shell has found itself in the "worst position" in the past year in terms of "overspending and going into significant areas in which the returns haven't come".
Strange as it may sound – with the Gulf of Mexico spill still hanging over BP's head – it may be that after several years in the shade, Shell's arch-rival once again finds itself in the stronger position. The oil spill in 2010 has forced BP to sell about $50bn of assets to help pay for the disaster, leaving it leaner and keener – and it is set to report a much smaller fourth-quarter profit decline of about 30 per cent when it reports its results on Tuesday.
The City will be hoping that Mr van Beurden's "kitchen sinking" may be Shell's version of BP's Gulf of Mexico heart attack. But the fear is that it just won't be enough.
Deep freeze: The drills fall silent in the Arctic
Shell has ditched plans to drill in the Alaskan Arctic this summer, as part of its drive to cut costs and boost profits.
Its decision follows a US court ruling that the country's Department of the Interior had failed to consider all the environmental aspects of exploring the Chukchi and Beaufort seas when it gave Shell permission to drill there.
Declining to say whether Shell would pull out of the Arctic altogether, Ben van Beurden said: "This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources to drilling in Alaska in 2014. We will look to relevant agencies and the court to resolve their open legal issues as quickly as possible."
Environmental campaigners were cheered by Shell's decision, suggesting that in the light of rising industry costs, other oil companies may also be forced to reconsider their plans to drill in difficult Arctic conditions.
Shell's Arctic campaign has been fraught with difficulties, most famously the grounding of its Kulluk oil rig off the Alaskan coast on the first day of 2013.
It has spent more than $5bn (£3bn) on Arctic exploration but has yet to locate any oil-bearing rocks.