Royal Dutch Shell will suspend drilling in offshore Alaska after a US court decision and as the oil major streamlines operations following a slump in annual profits, it said on Thursday.
The Anglo-Dutch group said it would halt the project this year after a federal appeals court last week ruled that the US government had improperly relied on inadequate information in the process of awarding licences for exploration in Alaska.
"The recent decision ... raises substantial obstacles to Shell's plans for drilling in offshore Alaska," Shell said in a statement accompanying the earnings release.
"As a result, Shell has decided to stop its exploration programme for Alaska in 2014."
Chief executive Ben van Beurden said it was a disappointing outcome, "but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014".
"We will look to relevant agencies and the court to resolve their open legal issues as quickly as possible."
Shell revealed the news in a poor results statement that also laid out plans to sell off $US15 billion ($A17 billion) of assets over the next two years.
Capital spending will also be reduced to $US37 billion in 2014, from $US46 billion in 2013.
"We are making hard choices in our worldwide portfolio to improve Shell's capital efficiency", van Beurden added.
Two weeks after a profits warning, Shell confirmed that net profits dived 39 per cent to $US16.371 billion in 2013, compared with $US26.712 billion a year earlier.
Shell shocked investors earlier this month with its first profit warning for a decade, blaming high exploration costs, pressures across the oil industry and disruption to Nigerian output.
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