Home Commodities The head of Shell supports a “more efficient” operation by defending the change in strategy regarding renewable energy

The head of Shell supports a “more efficient” operation by defending the change in strategy regarding renewable energy

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Chief Executive Wael Sawan plans to make Shell “more efficient” and more selective about how it invests in the energy transition as he champions a shift in approach that has seen several senior executives leave the company’s green divisions in the past six months. .

Since taking the top job in January, Sawan has outlined plans to boost returns by maintaining oil production, growing the gas business and cutting less profitable parts of the company’s low-carbon portfolio established under his predecessor Ben van Beurden.

“We need to be more agile, we need to be more focused, we need to be more disciplined,” Sawan told the Financial Times. “That will inevitably include options about where we operate but also, importantly, how we do it.”

Last month, the UK-listed energy major, which is the largest company in the FTSE 100, confirmed it would cut 200 jobs in its low-carbon solutions division and place a further 130 roles under review, which represents at least 15 percent of the workforce in that unit.

The cuts follow a decision to reduce Shell’s work on hydrogen technology for passenger cars to focus on hydrogen for heavy vehicles and industry. Shell is building Europe’s largest green hydrogen production plant in the Netherlands.

This year, Shell also agreed to sell its retail energy business in the UK and Germany and is looking to exit some of its investments in renewable energy generation and storage in Europe.

Senior executives, who left Shell because of the change, told the Financial Times that it had become clear internally that the company’s ambition in some of these areas had changed.

“It’s not what he’s said, it’s what he hasn’t said,” said one recently deceased executive, referring to Sawan’s perceived lack of support for parts of Shell’s Energy and Renewable Solutions business. “The silence was deafening.”

Sawan told the Financial Times that he remained committed to transforming Shell into a “multi-energy” company, while reducing net emissions to zero by 2050, but that Shell would no longer “aim to lead” in parts of the energy transition where it did not have . the appropriate skills and abilities.

“In transportation and industry we already have a significant market share there, and we think it is natural for us to lead while supporting the decarbonization of those sectors,” he said.

In addition to hydrogen production, that means Shell will focus its low-carbon spending on activities such as electric vehicle charging, biofuels and carbon capture and storage.

In areas where Shell lacks a unique capability, such as renewable energy generation, its goal would be to work with partners or not invest at all, Sawan said. “It’s actually a much more selective approach to where we’re going.”

The moves have been welcomed by many investors, with Shell shares trading near record highs in London. The stock was further supported after it reported strong third-quarter earnings on Thursday.

As part of the shift in emphasis under Sawan, the company has also said it will invest more in its world-leading gas business to increase liquefied natural gas sales volumes by 20 to 30 percent by 2030.

Selling more gas could mean Shell would have to revise down its emissions reduction targets during a review next year, analysts said.

Sawan said it was too early to comment on the energy transition strategy update due in March, but stressed that LNG had made a significant contribution to reducing global emissions over the past five years by enabling the shift from coal to gas for power generation, particularly in China.

“A sensible, focused approach to low carbon intensity gas molecules, and LNG in particular, is a key part of [our] strategy,” he added. “This goes hand in hand with our continued focus on pursuing cost-effective decarbonization with low-carbon molecular solutions.”

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