Shell will keep oil output steady or slightly higher into 2030 as part of the Chief Executive Officer, Wael Sawan’s, efforts to regain investor confidence as the energy giant wrestles with poor returns from renewables while oil and gas profits continue to boom, company sources told Reuters.
Sawan will announce at an investor event this week the scrapping of a target to reduce oil output by 1 per cent to 2 per cent per year, having already largely reached its goal for production cuts, mainly through selling oil assets such as its US shale business, the three sources said.
Sawan, who took the helm in January with a vow to improve Shell’s performance as its shares lag rivals, said oil and gas will remain central to Shell for years to come, insisting that efforts to shift to low-carbon businesses cannot come at the expense of profits.
His more cautious approach to the energy transition marks a change in tack from his predecessor Ben van Beurden who introduced the carbon reduction targets and the energy transition strategy.
Shell scrapped in recent months several projects, including in offshore wind, hydrogen and biofuels, due to projections of weak returns. It is also exiting its European power retail businesses, which were seen only a few years ago as key to its energy transition. At the same time, Shell reported record profits of $40 billion last year on the back of strong oil and gas prices.
“Sawan, a 48-year-old Canadian-Lebanese national, who previously headed Shell’s oil, gas and renewables divisions, will detail his vision at the June 14 (tomorrow) event in New York, which will include updates on capital allocation, shareholder payouts and “strategic choices we’re making,” he said recently.
