Shell’s plan to have its oil production decline by up to 2% each year this decade is currently under review, the supermajor’s new CEO Wael Sawan told The Times in an interview published on Friday, adding that he is a firm believer of the statement “don’t deny people energy.”
Back in 2021, Shell said that its oil production peaked in 2019 and is set for a continual decline over the next three decades as it looks toward the renewables side of the business.
However, the post-Covid rebound in oil and gas demand and the Russian invasion of Ukraine with the subsequent major dislocation of energy the trade have clearly shown “the fragility of the energy system when we starve it of the supply that is required,” Sawan told The Times.
“I am of a firm view that the world will need oil and gas for a long time to come. As such, cutting oil and gas production is not healthy,” Shell’s boss, who took over from Ben van Beurden on January 1, told the British newspaper.
Shell will shed more light on its oil and gas production targets at its capital markets day in June, Sawan said.
“We’re reflecting on what is the right guidance to the market,” he noted.
Last month, the other major UK-based oil firm, BP, said in its latest strategy update that its goal is to produce more oil and gas in the short term in a move welcomed by the market.
BP said in February that it would be producing more oil and gas for longer and increase investment into oil and gas projects by an average of up to $1 billion a year, or up to a cumulative $8 billion by 2030. As a result of these changes, BP anticipates its oil and gas production will be around 2.3 million barrels of oil equivalent a day in 2025 and aims for it to be about 2.0 million boe/d in 2030. This 2030 production would be approximately 25% lower than BP’s production in 2019, excluding production from Rosneft, compared to BP’s previous expectation of a reduction of around 40%. BP also lowered its emission reduction target to a fall of 20%-30% in emissions from the carbon in its oil and gas production in 2030 compared to a 2019 baseline—lower than the previous aim of 35-40%.
By Tsvetana Paraskova for Oilprice.com
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