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Shell’s CEO said cutting oil production is not good for consumers.
Peter Boer/Bloomberg
Shell
Chief Executive Wael Sawan indicated that the company will continue to focus on oil and gas production, potentially delaying plans for the transition to cleaner energy in the coming decades.
Shell (ticker: SHEL) and European pear
BP
(BP) have invested more in renewables and other forms of green energy than their US rivals
Exxon
(EOM) and
Chevron
(CVX), and Shell predicted that its own production of oil will decline. That has hurt BP and Shell in the eyes of investors after the jump in energy prices in 2022 led to record profits across the industry.
“I firmly believe that the world will need oil and gas for a long time to come,” Sawan, who started the job on Jan. 1, told Times Radio in the UK on Friday. “As such, curbing oil and gas production is not healthy.”
In 2021, Shell predicted that its own oil production would drop every year and fall by as much as 18% by 2030. BP had a similar outlook, but CEO Bernard Looney reversed its climate targets this year, saying it was cutting investment in exploration and production.
“We have, of course, seen the vulnerability of the energy system until 2022,” Sawan said on Friday. “If prices skyrocket, it’s not healthy for anyone, especially not the consumer.”
BP and Shell have lagged their US peers in terms of price-to-earnings ratios. Analysts have said investors interested in exposure to oil and gas have shunned them as they have put more money into renewables, while investors focused on environmental concerns have failed to reward them. This caused European energy companies to trade at a discount.
Shell shares had changed little during early London trading.
Write to Brian Swint at [email protected]
