February 23, 2024

Shell Plc sees a long-term role for natural gas in the world’s energy mix and aims to expand in key growth markets as Chief Executive Officer Wael Sawan revises the company’s strategy.

Liquefied natural gas teams are being urged to do more business in China and India, and the company is providing higher bonuses for deals struck in those and other target nations, according to people who have been briefed on the company’s plans.

Shell will examine investment opportunities for LNG export facilities or long-term supply deals, according to the people, who asked not to be named as the details are private. 

“We have always known that gas is crucial for the energy transition, but our new strategy is built around a new belief — that gas will continue to play a key role in the energy mix,” Cederic Cremers, an executive vice president for LNG at Shell, said in an internal memo seen by Bloomberg News. 

Shell declined to comment. Sawan, who became CEO in January, is scheduled to update investors Wednesday at a Capital Markets Day.

His plan comes after the performance of Shell’s integrated gas business helped lift first-quarter profit, and follows the unit’s record annual performance last year when LNG was boosted by Russia’s decision to cut pipeline supplies to Europe. It also comes as the wider sector reassesses the pace of its shift away from fossil fuels. 

Shell will keep oil output steady or slightly higher into 2030, scrapping annual production cuts, Reuters reported last week.

BP Plc is also moving to pump more oil and gas than previously planned in the near term, while Chevron Corp. forecasts strong long-term demand for natural gas — rather than a shorter-term role as a transition fuel to cleaner energy sources.

Sawan has already flagged Shell will exit businesses that aren’t producing adequate returns and the firm’s renewable power division has been told that it needs to become more profitable, not just deliver lower carbon emissions.

Some investors and activists have raised opposition to a weakening of climate pledges among the largest energy producers. Shell’s annual meeting last month was disrupted for over an hour by protests, including calls for the company to invest more in renewables. 

Shell’s refreshed LNG strategy will include additional work with customers to reduce emissions from the fuel by using carbon capture and storage, and also focus on hydrogen, according to the internal memo.

–With assistance from William Mathis.

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