Page 17 - EurOil Annual Review 2021

EurOil AUGUST EurOil

Shell CEO Ben van
Beurden.

side, Shell faces pressure to scale back its emis- they sell do not leave the market. Rather, they
sions and transform its business in the direction can end up in the hands of companies whose
of low-carbon technologies, following a court shareholders are less concerned with environ-
ruling in the Netherlands. mental considerations. At least in the control of
The ruling, in a case brought by environmen- ESG-conscious companies, these assets can be
talists, would require the Anglo-Dutch major made to operate in a cleaner way, through a focus
not only to increase its emissions reduction tar- on Scope 1 and 2 emissions.
gets, but also focus on emissions intensity and The CEO also dismissed environmental con-
not absolute emissions. This would make it diffi- cerns about Shell’s plan to develop the Cambo
cult for Shell to follow through on plans to grow oilfield near Shetland with private equity-backed
its gas business, even while scaling back on oil Siccar Point.
extraction. “For as long as the UK still needs oil and gas in
Shell has appealed against the ruling, and its [energy] consumption it’s better to produce in
analysts that NewsBase has spoken to believe it its own backyard,” he explained. “To import oil
more likely than not that the company will be and gas, which would be the alternative, would
successful. Investors certainly were not spooked obviously not serve the climate at all. Symboli-
by the verdict, with Shell’s share price seeing little cally, it’s not what people would like to hear. But
change on the day of its announcement. symbolism won’t help us with climate change.”
In an earnings call on July 29, van Beurden An argument against oil and gas consumers
ruled out any changes to the energy transition curtailing domestic supply is that those coun-
strategy it unveiled earlier this year. The majority tries will simply import more, and the fact that
of its shareholders voted in favour of that strat- those imports will have to be transported will
egy, although a significant minority of 30% also result in higher emissions.
backed a proposal by activist investors to fast- While Shell intends to scale up its renewables
track its shift away from oil and gas. and low-carbon business significantly over the
“I don’t think we’ll come up with a new strat- coming years, these projects still do not offer
egy,” van Beurden told investors in the call. “Our the kind of double-digit returns that oil and gas
strategy is very much aligned with what the developments do. In a rebuke of calls for the
plaintiffs would want us to do, which is working major to rein in hydrocarbon supply, Shell took
on our own emissions reduction, and also help- a final investment decision (FID) near the end of
ing customers reduce emissions.” July on the Whale project in the US Gulf of Mex-
Van Beurden said that asking one company ico, which at full capacity will flow 100,000 bar-
to make such sacrifices when its rivals and EU rels of oil equivalent per day (boepd). Production
states are not planning anything so ambitious is on track to start in 2022, with some 490mn boe
was “not only unreasonable but doubly [in] in total of reserves due to be developed.
effective.” Shell estimates it can generate an internal rate
Many in the industry have pointed out that of return of more than 25% at Whale, and most
individual companies can meet overly ambi- of the renewable projects it is investing in now
tious targets through divestments, but the assets will offer far less than this. ™

Annual Review •2021 www. NEWSBASE .com P17