THE boss of oil and gas giant Shell says the firm will quit operations in five out of 10 countries around the world as it looks to make dramatic savings.

Chief executive Ben van Beurden also plans to slash costs by 35 per cent and dispose of £20.8 billion in assets by 2018 in a drive to become the energy industry’s world leader.

While not identifying which operations the firm would exit from, investors in London were told that the UK and North Sea will remain in the portfolio.

But van Beurden insisted a leaner company would have to adapt quickly to trends, technology and market forces in order to preserve its long term future.

He said: “Our strategy should lead to a simpler company, with fundamentally advantaged positions, and fundamentally lower capital intensity.

“Today, we are setting out a transformation of Shell.”

The company already announced 12,500 jobs cuts including almost 500 in the North Sea.

Some of those will come as a result of its mega-merger with rival BG including the closure of its Aberdeen office by the end of this year.

The firm now expects to make £3.1bn in efficiency savings from the £35bn deal, up from its previous £2.4bn.

Van Beurden said: “The BG deal is an opportunity to accelerate the reshaping of Shell.

“Integration is gathering pace, and we expect to deliver more synergies, and at a faster rate. We actually see that it’s worth more than we thought it was.”

The aim now, he said, is to get Shell into a fitter, more sustainable shape capable of delivering back to shareholders and working on core future projects.

He said: “As well as low oil prices today, we are seeing higher levels of price volatility, due to geopolitical change, the speed of information flows, and the pace of innovation in our sector.”

“By capping our capital spending in the period to 2020, investing in compelling projects, driving down costs and selling non-core positions, we can reshape Shell into a more focused and more resilient company, with better returns and growing free cash flow per share.”

The company also confirmed its commitment to looking at developing its renewables portfolio.

He said: “We have to be there if we want to be relevant in 50-100 years time. We have got to go there, but it will have to make economic sense.”

Van Beurden added: “I see important opportunities for Shell from the substantial and lasting changes in the energy sector.

“We expect to see robust demand for oil and gas for decades to come, in a global energy system in a long-term transition to lower carbon fuels.”

“All of this is underpinned by an unrelenting focus on safe and environmentally-responsible operational performance, high quality and commercial project execution and prudent financial management of the company.”

Van Beurden set out Shell’s priorities as being cash engines, growth priorities and future opportunities.

He added: “Overall, Shell’s focus is on reshaping the company.

“We will retain the most competitive and resilient positions, through targeted investment, and substantial asset sales.

“This is a value-driven, not time-driven, divestment programme; and an integral element of Shell’s portfolio improvement plan.”

“As a result of Shell’s portfolio development and investment, we expect to see an improvement in returns in the next few years, our debt reduced, and significant growth in free cash flow, across a range of oil prices.”

Previously Shell announced an 89 per cent drop in net profit for the first quarter of 2016, blaming the slump on the price of crude.

Shares were up by around 3 per cent across the day following van Beurden’s update.