Shell halves green investment and boosts gas sales

Shell will halve investment in green energy and ramp up gas sales as it massively increase shareholder payouts.

The company has revealed plans to reduce investment in low-carbon energy from 20pc of capital expenditure to 10pc by 2030, at the same time as ramping up shareholder returns.

Shell also aims to grow sales of liquefied natural gas (LNG) by at least 4-5pc per year under previously announced plans to maintain oil and gas output at current levels through to 2030. The company is already the world’s largest LNG trader.

Plans to slash green investment are part of a push by Wael Sawan, the chief executive, to refocus Shell on oil and gas – a move that has been cheered by the markets but angered green campaigners.

Shell revealed on Tuesday that Mr Sawan had been handed a pay rise after receiving a total of £8.6m last year, up from £7.9m.

Mr Sawan said: “We are transforming Shell to become simpler, more resilient and more competitive.

“We want to become the world’s leading integrated gas and LNG business and the most customer-focused energy marketer and trader, while sustaining a material level of liquids production.

“Today we are raising the bar across our key financial targets, investing where we have competitive strengths and delivering more for our shareholders.’’

Mr Sawan said shareholder dividends and stock buybacks would rise from 30-40pc of cash-flow to 40-50pc, suggesting they could rise by up to two thirds in the best-case scenario. Shares in Shell rose almost 2pc on the news.

The company also signalled further cost cuts and revealed that it was examining “selective closures” of chemical plants in Europe, where high costs and a glut of exports from China are threatening the industry’s survival.

Shell did not say where the axe would fall but it is thought that its plants in the UK, which are mainly focused on gas, are unlikely to be affected.

It is the latest sign of major oil companies scaling back investment in green energy projects as investors demand they focus on profitability. BP also recently announced a major “reset” of its strategy.

While investors back a return to oil and gas, the move has angered green campaigners. Patrick Galey, of Global Witness, described Shell’s plans as “corporate greed at the expense of people and planet”.

He said: “It’s maddening to know that big oil bosses like Mr Sawan are raking it in, as they double down on the oil and gas that’s fuelling climate devastation, and continue to profit from an energy crisis that’s leaving so many of us poorer.”

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