New Shell boss hits the brakes to go green: Eco fury as energy giant announces oil production won’t stop until 2030
Shell’s new boss slammed the brakes on his green makeover yesterday with a plan to halt shrinking oil production and boost natural gas volumes.
Wael Sawan, who took over as CEO in January, also pledged to increase investor returns and cut spending to regain market confidence.
But the move sparked outrage from climate activists who said Shell was “double-dip on climate-destroying fossil fuels.”
In an update ahead of an investor day in New York, Shell said it would increase distributions to shareholders to between 30 and 40 percent of cash flow from its operations, up from its previous target of 20 percent to 30 percent.
It also pledged to buy back at least £3.9bn of its own shares in the second half of this year and cut spending to £17bn – £20bn a year from the current level of £18bn – £21 billion.
Dividend boost: Shell said it would increase shareholder payments to between 30% and 40% of cash flow from its operations, up from its previous target of 20% to 30%
Shell said its oil production would be kept close to current levels, which would help expand its privileged position in the market.
It also said it would expand its natural gas business.
It marked a shift from two years ago, when then-boss Ben van Beurden said oil production would fall 1 to 2 percent a year this decade from a peak in 2019, implying production would fall to about 1. 5 million barrels of oil. oil per day by 2030.
However, now it says it has already fallen to this level and will soon fall to 1.4 million.
And since it has achieved its goal, it is not making any further cuts.
However, Shell reiterated its goal of being a net zero company by 2050 and investing £8bn – £12bn in low carbon energy over the next two years.
“We are investing to provide the secure energy customers need today and in the future, while transforming Shell to win in a low-carbon future,” said Sawan.
“We want to play to our strengths.”
Shake-up: New Shell boss Wael Sawan has pledged to increase returns for investors, cut spending and regain market confidence
Jonathan Noronha-Gant, senior campaigner with activist group Global Witness, said Shell’s profits were “supposed to spur green investment” but were instead being used for “shareholder payouts and doubling down on climate-destroying fossil fuels.”
“For polluters, it will always be profit over people and planet,” he added.
The decision to increase shareholder returns and production comes as Sawan aims to increase the value of the company, which is lagging US rivals such as Exxon Mobil and Chevron.
The New York event is part of his plan to attract more US investors, and follows a record £32bn profit last year after energy prices soared following Russia’s invasion of Ukraine and prompted many fossil fuel giants to abandon their earlier renewable energy commitments had to be reconsidered.
Earlier this year, competitor BP scaled back its climate targets.