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Shell sees downstream annual organic free cash flow of $6-$7 billion by 2020

(Reuters) - Oil major Royal Dutch Shell on Wednesday reiterated its expectation to generate $6 billion to $7 billion annual organic free cash flow by 2020 for its downstream business.

The business, including refining, trading, marketing and chemicals has proved its importance during the oil industry’s downturn since 2014, providing the bulk of Shell’s profits as the price of crude collapsed.

Shell has in recent years transformed its downstream business by selling some plants and upgrading others, helping the company ride out oil price fluctuations and shifts in demand and deliver double-digit returns on capital employed.

Shell’s $6-7 billion forecast anticipates oil at $60 per barrel and mid-cycle downstream conditions, the company said, adding that it expects $9 billion to $12 billion in cash flow from the business from 2025.

The Anglo-Dutch company also said it plans to invest $7 billion to $9 billion a year across the business and expects to deliver a return on average capital employed of more than 15 percent.

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