ROYAL Dutch Shell chief executive Ben van Beurden has said the company remains committed to the North Sea as he underlined the potential it sees in the West of Shetland area.

The oil and gas giant plunged $18 billion (£13.8bn) into the red in the second quarter after slashing the value of its portfolio of assets around the world by around $17bn amid the fallout from the coronavirus crisis.

This has triggered a sharp fall in oil and gas prices this year.

READ MORE: Billions of barrels of crude to be left untouched off UK as coronavirus hastens 'peak oil'

The impairment charges reflected the fact directors now expect oil and gas prices to be much lower than they had previously forecast.

Shell’s plans to become a net-zero business in terms of emissions have also raised questions about the prospects for investment in its oil and gas assets.

However, asked about the outlook for the business in the North Sea and West of Shetland, Mr van Beurden told reporters: “We are still very much committed to that area … we still see a lot of potential in the West of Shetland area.”

Mr van Beurden made clear Shell remains bullish about the long-term prospects for the giant Clair and Schiehallion developments off Shetland, in which it has invested heavily in recent years.

Noting that the company is currently completing an exercise to determine which of its assets are core, he said: “Clair, Schiehallion, we see further running room there … I would be surprised if we would conclude that that wouldn’t be part of our portfolio going forward.”

Shell expects oil and gas to remain part of the energy mix for years.

READ MORE: Oil giant Shell announces plan to become net zero business by 2050

Gas provides a relatively low-carbon energy source. Oil will be needed for use in hard-to-decarbonise sectors such as aviation.

Mr van Beurden said with Shell looking to reduce costs in response to challenging market conditions it would make sense to try to maximise the value it can generate from existing assets.

This policy could work in the North Sea’s favour. Shell slimmed down its portfolio in the area in response to the sharp fall in the oil price from 2014 to 2016.

It sold off a range of assets in the area and shed hundreds of jobs.

The company sanctioned investments in North Sea assets, such as the Penguins field off Shetland, during the recovery in the market that was cut short by the spread of the coronavirus. However, the North Sea will face intense competition for investment from Shell’s operations in other areas. Mr Van Beurden said Shell’s crown jewels include its deep water positions in the Gulf of Mexico and off Brazil.

Shell said the write-offs made in the second quarter included amounts in respect of four offshore projects in Europe, without giving details.

The outlook for jobs in Scotland is uncertain. Shell employs around 1,000 people in its North Sea business.

Mr van Beurden said the company will look at all areas of its operations around the world as it aims to reduce costs and to develop a simpler and more efficient business.

READ MORE: 7,500 jobs lost already in UK oil and gas sector

It will probably end up with fewer employees globally but it may be some months before any changes are finalised. The company employs around 83,000 people globally.

Stripping out the effects of impairments and changes in the value of stocks, Shell made $638 million (£492m) underlying profit in the second quarter, compared with analysts’ expectations of a $700m loss. It made $3.5bn profit in the same period last year.

The company declared a second-quarter dividend of $0.16 per share, down from $0.47 in the same period last year. In April, Shell announced the first cut in its dividend since the Second World War.

Mr van Beurden said the company was taking a prudent approach that would allow it to continue to invest in growth amid the transition to a lower-carbon energy system.

Royal Dutch Shell A shares closed down 68p at 1158.8p.