She’ll in its bid to transit to new business initiative, has penciled down about $5 billion to be spent yearly.
Shell is betting on its expertise in power trading and rapid growth in hydrogen and biofuels markets as it shifts away from oil, rather than joining rivals in a scramble for renewable power assets, Reuters quotes company sources as saying.
Shell and its European rivals are seeking new business models to reduce their dependency on fossil fuels and appeal to investors concerned about the long-term outlook for an industry under intense pressure to slash greenhouse gas emissions.
Shell will present its strategy on February 11 and unlike Total and BP the company will focus more on becoming an intermediary between clean power producers and customers than investing billions in renewable projects, the sources said, giving previously unreported details of the plan.
Shell announced in October it would increase its spending on low-carbon energy to 25 per cent of overall capital expenditure by 2025 and the sources said that would translate into more than $5 billion a year, up from $1.5 billion to $2 billion now.
The Anglo-Dutch company will, however, keep its overall oil and gas output largely stable for the next decade to help fund its energy transition, though gas is set to become a bigger part of the mix, the sources told Reuters.
A Shell spokeswoman declined to comment on the details of the company’s new strategy ahead of its February announcements. BP, meanwhile, plans to slash its oil output by 40 per cent by 2030 and has swept aside its core oil and gas exploration team to focus on renewables, with spending on low-carbon energy set to rise 10-fold to $5 billion over the coming decade.
While Europe’s big oil firms are all rolling out strategies to survive in a low-carbon world, investors and analysts remain sceptical about their ability to transform centuries-old business models and triumph in already crowded power markets.
Central to Shell’s plans are its experience in trading all types of energy from oil to natural gas to electricity and its vast retail network, which has more outlets than either of the world’s two biggest food chains, Subway and McDonald’s.
Shell is already the world’s leading energy trader, an activity it calls “marketing”. It trades about 13 million barrels of oil a day, or 13 per cent of global demand before the pandemic, using one of the biggest fleets of tankers.
It is the top trader of liquefied natural gas (LNG), buys and sells power, biofuels, chemicals and carbon credits, and now aims to use its pole position to snare a large chunk of the fast-growing low-carbon power market.
“The future of energy is particularly bright for our marketing and our customer-facing businesses where we already have scale. So we will accelerate a growth plan which is already underway,” Chief Executive Ben van Beurden said in October.
