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Business

Shell looks set to whittle down European cash pile

Energy giant Royal Dutch Shell has said it needs to reduce risks stemming from the ongoing eurozone debt crisis and the uncertain future of the single currency. It intends to remove lots of cash resources from Europe.

Oil conglomerate Royal Dutch Shell announced it was about to move a considerable part of its cash pile from European banks because of the continent's protracted debt crisis.

The Times newspaper reported in its Monday edition that the Anglo-Dutch energy group was looking at putting some of its $15 billion (12.13 billion euros) in cash into US government bonds and banks.

Shell's Chief Financial Officer, Simon Henry, was quoted as saying that the move was necessary to reduce growing risks in the company's financial operations. "There's been a shift in our willingness to take credit risk in Europe," Henry said.

Playing it safe

The Times emphasized, though, that Shell would be required to keep some of its financial resources in Europe to continue funding its operations there.

But the energy giant has been battling with a worsening business environment on the continent, with experts predicting sluggish oil demand in Europe for this year and the next.

"Our fundamental thesis that global oil market conditions were poised for a breather in 2012 remains intact, but has unfolded in a more pronounced manner than we expected," RBC Capital Markets said in a note.

The brokerage had downgraded Shell to "sector perform" from "top pick", but conceded that while oil demand might slump in Europe, the Middle East and China could remain bright spots for the company.

hg/rg (Reuters, AFP)