Oil giant Shell warns cutting production ‘dangerous’
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It would be irresponsible and dangerous to reduce oil and gas production, Shell’s boss has said.

According to Sawan, the world still “desperately needs oil and gas” since renewable energy is not replacing it fast enough.

A cold winter in Europe and increased demand from China could push energy prices and bills higher in the near future.

Shell’s plan to continue current oil production until 2030 angered climate scientists.

“Rather than trying to suggest that prolonging our use of oil and gas will benefit the most vulnerable in society,” said Professor Emily Shuckburgh, a climate scientist at Cambridge University. Shell and other companies should focus on accelerating the green transition, she said.

According to Sawan, cutting oil and gas production would be dangerous and irresponsible, as we saw last year when the cost of living shot up.

Global leaders pledged to keep the world from warming by more than 1.5C this century by ditching fossil fuels in favor of greener alternatives.

As part of its plan to reduce dependence on Russian petroleum and gas, the European Commission last year outlined how it would accelerate the transition to green energy.

Infrastructure is one of the most significant obstacles to moving to a more sustainable form of energy in many countries.

Last year, poorer countries like Pakistan and Bangladesh were unable to afford Liquid Natural Gas (LNG) shipments that were instead diverted to northern Europe as a result of an international bidding war.

“They took LNG away from these countries, so children had to study and work by candlelight,” he said. We need a transition that works for all parts of the world and not just for one.”

Several respiratory and cardiovascular problems are associated with household gas appliances, according to the Committee on Climate Change.

A climate policy expert at Climate Analytics, a global science and policy institute, told the BBC: “The idea that we have to choose between fossil fuels or candlelight is a gross misrepresentation of reality, because renewable energy is cleaner, cheaper, and healthier for the public.”

According to a memo seen by the BBC, economic shocks like the Covid pandemic have “turned a stretching target into a huge challenge”.

According to Fatih Birol, director of the International Energy Agency, “if governments are serious about the climate crisis, they cannot make new investments in oil, gas, and coal.”

It is “economic and moral madness” to invest in new oil and gas production, according to UN head Antonio Gutteres.

‘Lack of stability’

Shell has a long history and its headquarters are in the UK. In contrast with more welcoming countries, Mr Sawan said the UK may become less attractive if its energy policy and taxation are unclear and unstable. Oil and gas prices are unlikely to fall below thresholds for a sustained period in the future, which is why the UK increased tax on UK-derived profits from 40 to 75% until 2028.

Oil and gas imports account for more than half of the UK’s energy needs – and without renewed investment in the North Sea, that proportion is expected to rise. Earlier this month, Shell sold its stake in an undeveloped oil field at Cambo.

Ultimately, it is up to the government to decide whether to import or produce domestically.

“When you do not have the stability you need for these long-term investments, it raises questions when compared to other countries where such investments are well supported.”

‘Energy we desperately need’

At a recent investors’ meeting where the New York Stock Exchange laid out the company’s plans to cut costs and maximize profits, Mr Sawan highlighted the warm welcome given to the company by the exchange.

“There was an exemplary welcome. The Shell flag was waving next to the New York Stock Exchange flag,” he said.

The officials there reinforced his belief that the US supported oil and gas companies more than other countries.

As someone from Lebanon, where we are starved of energy, they said we continue to value a company that provides us with that energy.

Future move to US

Shell’s headquarters and stock market listing could be moved to the US, according to Sarwan. As a result, American oil companies command higher prices for their shares – Exxon Mobil, for example, has a profit per dollar of $40 more than Shell.

“There are many who question whether that valuation gap can only be bridged by moving to the US. Moving to the US is not a priority for the next three years.”

After that, what? Ultimately, I am committed to maximize shareholder value, so I would never rule out anything that could potentially create the right conditions for the company and its shareholders.

Mr Sawan’s comments will add to fears that London’s stock market is losing its lustre as a venue for multinational companies to raise money after technology darling ARM Holdings recently announced plans to move its primary listing to the US, even though Shell says it does not plan to move its headquarters or stock market listing from London to New York for the next three years.

If the UK’s most valuable company relocated to the US, the country’s financial prestige would be seriously damaged and jobs in the financial sector would be lost.