As Royal Dutch shell switches from oil and betting its expertise on power trading and rapid growth in hydrogen , rather than joining its counterparts in a scramble for renewable power assets
To reduce the dependency on fossil fuels shell and its European counterparts are seeking new business models, which will intrigue investors concerned about the long-term outlook for an industry under intense pressure to slash greenhouse gas emissions.
Shell will focus mainly on becoming a conciliator between consumers investing billions in renewable projects and clean power producers, The Company will present its strategy on February 11.
The energy company in October announced that it would increase its spending on low-carbon energy to 25% of overall capital expenditure by 2025.
Ben van Beurden, the Chief Executive officer of Royal Dutch Shell plc said:
“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.”
However till the next decade the company will keep its gas output and oil stable to fund its energy transition, though gas is set to become a bigger part of the mix.
Shell’s counterpart British petroleum plans to slash its output by 40% by 2030 and has swept its oil and gas exploration team to focus on renewable.
All of Europe’s oil firms are rolling out strategies to survive in a low-carbon world, analysts and investors remain skeptical about their ability to transform centuries-old business models.
Shell has already become the world’s leading energy trader and it trades around 13 million barrels of oil a day or 13% of global demand before the pandemic.
Christyan Malek, JP Morgan’s analyst said:
“Shell faces difficult choices on how to balance its trading cash flow that leverages oil products while still having carbon-intensive operations,”
“But because of their scale, customer base and distribution, they can be much more flexible.”
