Page 14 - EurOil Week 10 2023

EurOil PROJECTS & COMPANIES EurOil

Shell to reconsider plans to

scale back oil output

UK SHELL will reconsider its current target of low- previous goal of 35-40%.
ering oil production by the end of the decade, In contrast to BP, Shell never said it would
Leading oil companies its CEO Wael Sawan said last week. reduce gas output, having banked heavily in
are revising plans to cut Sawan, who took over at the company’s helm recent years on rising global demand for LNG
down on oil and gas at the start of the year, has supported his pre- in the coming decades. Sawan did not say that
investments in light of decessor Ben van Beurden’s strategy of shifting his company would review its emissions targets.
the global energy crisis. the company towards lower-carbon energy, Shell’s current strategy envisages the carbon
whilst also improving performance and review- intensity of its operations (Scope 1 and 2 emis-
ing the company’s portfolio. On future produc- sions) and the carbon intensity of its energy
tion levels, however, he said that the company products (Scope 3 emissions) by 6-8% by 2023,
was “reflecting on what is the right guidance to 20% by 2030 and 45% by 2035. It is targeting
the market.” net-zero emissions by 2050. It increased its
“I am of a firm view that the world needs ambitions after a Dutch court ruling in 2021
oil and gas for a long time to come,” he said in concluded that the company’s strategy was not
an interview with The Times UK newspaper on in line with Paris Agreement goals.
March 3. “As such, cutting oil and gas produc- Global energy-related emissions of CO2
tion is not healthy.” soared to a record high last year, despite an
Shell expects its oil and gas production this increase in the use of renewables, increasing by
quarter to average between 1.8 and 2.0mn 0.9% to 36.8bn tonnes. This was caused in part
barrels of oil equivalent (boe). Back in 2021, by various countries increasing the burning of
the company had predicted that its oil output coal in response to soaring gas prices and cuts
would decline every year and drop by as much in Russian gas supply to Europe. Energy sector
as 18% of 2030. emissions have risen every year since records
The company is among a number of leading began, with the exception of 2020, when energy
international oil and gas producers to recon- demand slumped as a result of COVID-19
sider production targets in response to the lockdowns.
global surge in energy prices and heightened Notably, much of Shell’s progress so far in
threat to energy security over the past two reducing oil production, like BP, was deliv-
years. Many of them announced plans to scale ered by simply disposing of assets. This means
back production between 2019 and 2021, when that those assets remain in the global energy
prices were far lower. system, continuing to cause emissions, but
“We’ve seen of course through 2022 the fra- under a different operator. Shell will continue
gility of the energy system,” Sawan said. “To see to reconfigure its upstream portfolio, divesting
prices start to skyrocket, that’s not healthy for lower-margin assets under Sawan.
anyone, particularly consumers.” “We focus on value over volume,” he said.
His comments come after BP CEO Bernard “So it’s not how many barrels we’re producing,
Looney in February scaled back his compa- but the margin that we extra from the barrels
ny’s targeted reduction in oil and gas output we produce.”
in 2030 from 40% to only 25%. The UK major Shell will continue to invest in both oil
is also now aiming to cut upstream emissions and gas but also low-carbon technologies,
by 20-30% by the end of the decade, versus a he said. ™

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