The head of oil and gas company Royal Dutch Shell has said the ongoing transition to low-carbon energy sources may accelerate as economies recover from the impact of the coronavirus crisis.
Reuters Newsagency reports Chief Executive Ben van Beurden said said while Shell was not ringfencing its low-carbon Integrated Gas and New Energies division from spending cuts to weather the crisis, those businesses would be shielded from the worst of the reductions.
“Where possible, we try to spare New Energies a little bit and that is basically because we still believe that there is an energy transition underway which may even pick up speed in the recovery phase of this crisis and we want to be well positioned for it,” he said after Shell announced first-quarter results.
Under pressure from a slide in oil prices, Shell slashed its dividend by two-thirds, having already announced a US$5 billion cut to its 2020 investment budget to US$20 billion last month.
About 45 per cent of the spending cuts will hit Shell’s upstream, or exploration and production, business, with 30 per cent for downstream which includes the refining and marketing of oil products, Mr van Beurden said according to Reuters.
He said the other 25 per cent in cuts would come from Integrated Gas and New Energies but added that the crisis would not distract the company from its shift to low-carbon energy as it braces for a complete overhaul over the next 30 years.
The head of the International Energy Agency (IEA), Dr Fatih Birol, told Reuters this week that global efforts to minimise the fallout from the pandemic presented an historic opportunity to scale up the technologies needed to move to cleaner energy.
The European Union, meanwhile, is working on a revised work plan for its climate policies because of the crisis which is set to include new, more ambitious targets for 2030, according to a draft seen by Reuters.
Shell’s low-carbon energy division, which includes wind and solar energy and retail power distribution, was due to receive investment of up to US$2 billion in 2020 and then up to US$3 billion a year thereafter.
Shell’s Chief Financial Officer Jessica Uhl said the fundamental outlook for Shell’s focus on shifting from liquid fuels to generating and distributing electricity had not changed.
“Companies growing low-carbon businesses should eventually be rewarded by the market, and ultimately we see this as the most likely way for Shell to rebuild its ambition to be a world- class investment case over the longer term,” Barclays equities analysts said in a note.
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