SUMMARY
- Shell CEO Wael Sawan to maintain or marginally increase oil output through 2030, scrapping a prior target to reduce oil production by 1-2% annually.
- Strategic shift reflects the disappointing performance of renewables versus robust oil and gas profits.
- Sawan will reveal his comprehensive vision on capital allocation, shareholder payouts, and strategic choices at a New York event on June 14.
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As Shell grapples with dwindling returns from renewable energy investments, CEO Wael Sawan is reportedly set to sustain or marginally increase the company's oil output through 2030. This strategic redirection is part of a wider plan to rebuild investor faith, as lucrative oil and gas profits contrast starkly with the disappointing performance of the renewables sector.
Sawan is anticipated to reveal the cancellation of an objective to cut oil production by 1% to 2% annually at an investor meet-up next week. This comes as the company has largely fulfilled its production cut targets by selling off oil assets, including its U.S. shale business.
Sawan, who took on the leadership mantle earlier this year, assured that oil and gas would remain integral to Shell's operations. He argues that a move towards lower carbon ventures should not jeopardize profitability, thereby marking a strategic shift from his predecessor Ben van Beurden's policies.
In light of poor projected returns, Shell has recently abandoned several projects in the offshore wind, hydrogen, and biofuels sectors. Furthermore, it is withdrawing from European power retail businesses, previously seen as crucial to the energy transition. Despite this, buoyed by robust oil and gas prices, Shell reported record-breaking profits amounting to $40 billion last year.
Sawan is expected to unveil his comprehensive vision at a New York event on June 14. This will include updates on capital allocation, shareholder payouts, and strategic choices. The recent revelation of a 20% reduction in oil output by 2030 now being under review further emphasizes the shift in the company's focus.
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