Oil and Gas News

Shell ponders new direction for energy portfolio

Shell chief executive officer Ben van Beurden has described 2020 as a year that was challenging as well as inspiring.

The company started 2020 confident that it would be a year of celebrating financial success, but soon realised it would have to cut back on spending plans, operating budgets and dividend.

“I had a knot in my stomach on the day we had to announce it, even though, at a senior level, we all agreed that this was the right thing to do. We agreed it was for the long-term benefit of Shell, it would preserve our financial resilience and set us up for success in whatever comes next,” van Beurden said.

Shell further emphasised that the amount of focus and attention on doing the right thing was key to keeping everything going without any major incidents.

“It was remarkable. And it was not down to luck. It was the quality and the focus of the organisation. From technical support, to business continuity and contributing to community projects. And the way we created the sense of togetherness and looking after each other had something to do with it,” van Beurden said.

“Not only did we show that we are resilient, but also, as a business, we really matter and we continue to provide energy to a world that needs it, even under the most difficult of circumstances.”

Looking ahead, the company will provide an update on how it will achieve its net-zero ambition in February, with its new direction having a much stronger focus on the future of energy.

“Our oil and gas fields, our assets and our technology bring great value to Shell, but so does having the best position with customers,” van Beurden said.

“And I am really excited about the capabilities Shell has: the foundations that we have, the platform of commerciality, the quality of the people we have. We have the financial power of the businesses we have built, we have the infrastructure in the middle to really make change happen and we have the businesses that will grow as we change.”

In addition, the company announced its ambition to be a net-zero emissions energy business by 2050 in April last year, highlighting that all of its operations have to be net zero as the first step.

The second step will see Shell strive towards reducing its carbon intensity of its products and lastly helping customers who depend on carbon-based energy products address their emissions.

“Our ambition means dramatic change for Shell as our current plans will not get us there. So, over time, those business plans will have to change, as society and our customers also change,” he said.

“Our net-zero ambition means changing the way we think and the way we are organised. The strategy we are setting is transformational. Now, of course, we also have to reduce cost, but that is actually a consequence of having a simpler organisation. Cutting jobs is an extremely tough process, but we have to do it if we want to change.”