Page 4 - EurOil Week 24 2021

EurOil COMMENTARY EurOil

Shell to fast-track transition

following Dutch climate ruling

The expectation is that many IOCs will divest large portions of their oil and

gas operations, creating an opportunity for NOCs to expand

GLOBAL ROYAL Dutch Shell will fast-track its energy its emissions in absolute terms. Its current inten-
transition strategy, CEO Ben van Beurden sity targets would still allow the major to expand
announced on June 10, after a bombshell ruling its output in theory. In a strategy unveiled in Feb-
by a Dutch court last month. ruary, the company projects that its oil produc-
WHAT: Shell set some of the most ambitious targets tion would decline by 1-2% annually as a result
Shell has pledged to in the oil industry earlier this year, vowing to of divestments and natural decline between now
accelerate its energy reduce the net carbon intensity of its products and 2025. But it plans to bring more than 7mn
transition plans after a by 6-8% by 2023, 20% by 2030, 45% by 2035 and tonnes per year (tpy) of cleaner LNG production
court ruled last month it 100% by 2050, using its emissions in 2016 as a capacity in the same period.
was not doing enough to baseline. However, the court in The Hague ruled Shell plans to appeal against the court ruling,
address climate change. that the Anglo-Dutch major’s policy on climate although under law, the verdict applies immedi-
was “not concrete and is full of conditions ... ately and cannot be suspended before the appeal,
WHY: that’s not enough.” It called for the company to van Beurden has said.
The court has ordered implement a steeper reduction in its Scope 1, 2 “For Shell, this ruling does not mean a
Shell to reduce its and 3 carbon emissions of 45% by the end of the change, but rather an acceleration of our strat-
emissions faster and decade. egy,” van Beurden said. “Now we will seek ways
in absolute rather than “The court orders Royal Dutch Shell, by to reduce emissions even further in a way that
intensity terms. means of its corporate policy, to reduce its CO2 remains purposeful and profitable. That is likely
emissions by 45% by 2030 with respect to the to mean taking some bold but measured steps
WHAT NEXT: level of 2019 for the Shell group and the suppliers over the coming years.”
IOCs are set to continue and customers of the group,” Judge Larisa Alwin Shell has not divulged details on how it
divesting their oil and gas said. intends to quicken the pace of its transition
operations, while NOCs She went on to say that “the conclusion of the plans. The major had hailed its February plan as
that are less beholden court is therefore that Shell is in danger of violat- an “accelerated strategy” to “drive down carbon
to climate-conscious ing its obligation to reduce. And the court will emissions.” Under that strategy, the company
investors will be able to therefore issue an order upon [Shell.]” plans to spend $5-6bn annually in marketing,
expand. Crucially, the court said Shell should reduce renewables and energy solutions, along with

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