Shell is backtracking. The oil giant announced on Wednesday June 14 that it would maintain “stable” production of black gold by 2030. A decision that goes against the commitments made by the company in 2021, when it had announced a reduction of 1% to 2% per year. “We are investing to provide the energy security that customers need,” said the group’s general manager, Wael Sawan, quoted in a press release. Shell shares closed Wednesday up 0.37% at 2,304.50 pence on the London Stock Exchange.
Shell also announced a series of measures in favor of its shareholders, including a 15% increase in the dividend per share for the 2nd quarter of 2023 and share buybacks of a minimum value of 5 billion dollars (4.61 billion euros) for the second half of this year.
Objectives already achieved
This decision provoked the ire of environmentalists. “Like other fossil fuel giants which have also scaled back their ambitions, Shell now admits that it has no plans to change its business model”, denounces for its part the NGO Friends of Earth. Simon Evans, from the website Carbon Briefinterviewed by AFP, believes for his part that this kind of strategic decision implies that “we are not on the right track to limit global warming to 1.5 degrees”, as planned under the Agreements of Paris.
“Our goal of a reduction in oil production in 2030 has not changed, we have just reached it 8 years earlier than planned,” said a spokesperson. Indeed, the black gold production reduction targets posted in 2021, and based on 2019 production, were achieved in 2022 thanks to disposals such as the sale of shale oil deposits in the United States. The oil company also justifies its choice by the need to provide an efficient energy supply to its customers, in an increasingly uncertain global context.
Attract investors
The oil company also argued that it would need investors to finance its energy transition. If the group were to “destroy value for (its) shareholders, it could appease some people in the short term. But in the longer term, it would actually be bad for the energy transition”, said Wael Sawan. According to him, the group would be forced to maintain a very high yield in order to attract new investors, with the aim of ultimately financing the development of renewable energy.
On the day of this announcement, the International Energy Agency (IEA) indicated that global oil demand would peak “before the end of the decade” thanks to the rapid development of electric vehicles.