The energy transition talks came in hot but there appears to be a shift; majors are backpedaling on prior commitments to cut back on oil production.
bp was the first, and now Shell Corporation is moving in the same direction.
The multinational has dropped its previous target to slash oil production by 20% by 2030. It produced 1.5 million barrels per day in Q1 this year. Shell said it will now keep oil production steady and grow its natural gas business to defend its position as a leading liquefied natural gas (LNG) player.
Its capital spending will be in a range of US$22 billion to US$25 billion per year for 2024 and 2025, after a planned US$23 billion to US$27 billion range for 2023. Shell also plans to spend around US$40 billion on oil and gas production and trading between 2023-2025, compared with US$35 billion on its downstream, renewables and low-energy solutions businesses.
bp’s shift was similar as it planned to cut its oil and gas output by 40% by 2030.
bp’s renege was in response to the world’s evolving energy needs, it said on Feb. 8. It said that it is not dialing back on its transition to green energy; that it intends to increase its investment in oil and gas, and in its “transition growth engines” – bioenergy, hydrogen, renewables, electric vehicle charging and convenience.
Shareholders, however, were not pleased and called for the Chief Executive Officer (CEO) Benard Looney to go.
Shell’s CEO Wael Sawan faced fire from anti-oil activists at the company’s May 23 shareholder meeting.
According to Reuters, Sawan in recent months had scrapped several projects, including offshore wind, hydrogen, and biofuels, due to weak return forecasts. But the company said it remains committed to slashing its emissions, and moving to net zero by 2050.
