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Shell CEO Speaks Out Against Anti-Oil Activists

Investment in oil and gas will continue despite growing climate concerns and the “demonization” of the industry simply because the world demands it, the chief executive of Shell, Ben van Beurden, told Reuters in an interview.

Shell has been among the most active Big Oil companies in branching out in new, non-fossil fuel focused directions, including EV charging and renewable energy generation. In fact, Shell has the ambition to become the world’s largest utility in the world, and soon—by 2030.

In the meantime, however, the Anglo-Dutch supermajor will continue investing in oil and gas, and investors need not worry about the long-term prospects of its core business because the demand is, and will be, there.

“Despite what a lot of activists say, it is entirely legitimate to invest in oil and gas because the world demands it,” Van Beurden said. “We have no choice,” he added, referring to long-life oil and gas projects.

Investor concern seems to be focused on these long-life projects such as deepwater field development, chemical plant construction, and LNG plants. These are costly, with the price tag sometimes in the billion-dollar range, and they take years to complete. This means a long-term and expensive commitment on the part of the company, so with the increasingly vocal climate activism, a lot of investors have begun questioning the long-term survival chances of the oil and gas industry and its profitability.

Related: Trump’s Big Biofuel Package Has No Teeth

Yet Big Oil is already taking steps to insure itself against any problems in the future. Thanks to the 2014 price crisis, Shell, like its peers, has reoriented its focus towards lower-cost projects that can break even at $20-30 per barrel and are also less carbon-intensive than comparable projects.

“We can sustain an upstream portfolio all the way into the 2030s if there is an economic rationale for doing that and a societal rationale for doing that,” Van Beurden told Reuters. “Fortunately enough, we have more of those than we have money to spend on them.”

By Irina Slav for Oilprice.com

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  • Trakar Shaitanaku on October 16 2019 said:
    People like you, and the Shell company leadership are like the world's drug dealers claiming that they cannot quit doing business because the addicts keep buying your products. Reform or be prosecuted by the survivors of your crimes,...if there are any.
  • Mamdouh Salameh on October 15 2019 said:
    Shell’s global investment strategy will continue to be guided by four pivotal principles for the foreseeable future.

    The first principle is that there will be no post-oil era throughout the 21st century and probably far beyond. Oil will continue to reign supreme all through.

    The second principle is that there will be no peak oil demand either. While an increasing number of electric vehicles (EVs) on the roads coupled with government environmental legislations could slowly decelerate the demand for oil, EVs could never replace oil in global transport throughout the 21st century and far beyond.

    The third principle is business opportunities. While Shell and Big Oil are investing huge amounts in renewables, such investment pales in size when compared with that in oil and gas exploration and production, refining and petrochemicals. Oil and gas will remain the core business of Big Oil well into the future or at least until returns on clean energy start making commercial sense.

    The fourth principle is that with global oil consumption exceeding 100 million barrels a day (mbd) and growing, the notion of imminent energy transition looks like an illusion. In fact hydrocarbons accounted for 84.7% of global primary energy consumption in 2018. That remains so despite being challenged by serious environmental policies and despite a global expenditure of $ 3.0 trillion on renewable energy during the last decade. This is a hefty price to pay just to gain only a percentage point of market share from coal.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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