Total SA (ADR) (TOT), ConocoPhillips (COP): Three Major Challenges for Royal Dutch Shell plc (ADR) (RDS.A)

Motiva refinery
Lastly, Shell’s Port Arthur Motiva oil refinery, which it co-owns with Saudi Aramco, may present an additional challenge for van Beurden. The giant refinery, currently the largest in North America after it recently finished up a $10 billion expansion project, has been plagued by several recent mishaps, including a fire in June of last year that forced it to close down for several months. Operations at Motiva only recently returned to normal after it was shut down to correct operational issues related to an unspecified process unit on July 10.

The bottom line
To be fair, however, not all of Royal Dutch Shell plc (ADR) (NYSE:RDS.A)’s major projects have been dismal failures like the ones that were the focus of this article. In fact, thanks to solid performance from some of its businesses, including integrated gas and downstream, Shell projects its cash flow in the period 2012-2015 to be 30%-50% higher than in the 2008 to 2011 period.

But still, investors remain concerned because there appears to be no end in sight to the company’s spending; Shell recently raised its capital spending budget to $40 billion for the year, up from its previous estimate of $33 billion. Going forward, capital efficiency will be key if Shell is to convince shareholders that it is a capable steward of their money and that it can continue growing cash flow and sustaining dividend payments.

The article 3 Major Challenges for Shell originally appeared on Fool.com and is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron.

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