Shell Outlines Strategy for Enhanced Value, Reduced Emissions

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The oil and gas company commits to increased shareholder distributions, cost reductions, and reaffirms net-zero 2050 pledge.

Shell recently briefed investors on its refined strategy, aimed at achieving increased value and lower emissions, coupled with improved shareholder returns amid a balanced energy transition.

"We are making investments to ensure secure energy provision that is needed today and in the foreseeable future, while concurrently reshaping Shell to thrive in a low-carbon future. Performance, discipline, and simplification will serve as our guiding tenets as we allocate capital to increase shareholder distributions and facilitate the energy transition," noted Shell Chief Executive Officer, Wael Sawan. This elucidation embodies Shell’s balanced approach in implementing its Powering Progress strategy.

On the value front, a heightened focus on performance, coupled with enhanced capital and cost discipline, will underpin increased shareholder distributions, ranging from 30-40% of CFFO throughout the cycle, up from 20-30% earlier. This will be realized through a mix of dividends and share buybacks. With effect from Q2 2023, Shell expects to elevate the dividend per share by 15%, payable in September, and commence share buybacks of a minimum of $5 billion for H2 2023, subject to Board approval.

In its commitment to secure energy supply and active carbon emissions reduction, Shell announced its plans to:

  • Expand its leading Integrated Gas business and maintain a global foothold in the liquefied natural gas (LNG) market.
  • Consolidate its advantaged position in Upstream to secure cash flow longevity by stabilizing liquids production till 2030.
  • Utilize its brand, customer relationships, and trading strengths to optimize value from investments made in Downstream and Renewables & Energy Solutions, while aiding customers across the transport and industry sectors to decarbonize.

To this end, Shell intends to enhance the performance of its Marketing business while creating leading positions in low-carbon fuels and electric vehicle charging. The company also plans to make disciplined investments in hydrogen and carbon capture and storage (CCS), repurpose its Energy and Chemicals Parks footprint to offer low-carbon solutions, conduct a strategic review of its assets in Singapore and refine its European footprint. Additionally, selective investments in Power will be made, focusing on markets where trading activities and customer reach can yield higher returns.

On the emissions front, Shell is making significant strides towards its goal to become a net-zero emissions energy business by 2050, by mitigating emissions from its operations and the fuels and other energy products it sells to customers. In its ongoing progress, Shell aims to achieve near-zero methane emissions by 2030, eliminate routine flaring from its Upstream operations by 2025, and invest $10-15 billion from 2023 to 2025 to support the development of low-carbon energy solutions, including biofuels, hydrogen, electric vehicle charging, and CCS.

"We must continue to create profitable business models that can scale quickly to truly impact the decarbonization of the global energy system. We will invest in the models that work - those with the highest returns that play to our strengths," concluded Sawan.