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Shell is holding its Capital Markets Day on Tuesday in New York—and analysts expect Chief Executive Officer Wael Sawan to reaffirm the UK-based supermajor’s new focus on oil and gas.
Shell was one of the first European majors to pivot back to oil and gas in a 2023 strategy to continue investing in oil and gas production and selectively pour capital into renewable energy solutions.
Shell’s Sawan has said that reducing global oil and gas production would be “dangerous and irresponsible” as the world still needs those hydrocarbons.
Last year, Shell reaffirmed its ambitions to be a net-zero energy business by 2050 but eased its carbon intensity target for 2030 as it has shifted away from clean power sales to retail customers.
Over the past two years, Shell has prioritized streamlined performance and cost cuts – including via jobs cuts – to address the underperformance of its stock compared to its American competitors.
Shell has had more success than BP in this quest, also because it reverted to prioritizing oil and gas again around two years earlier than the other UK-based supermajor.
During the strategy update on March 25, analysts will be looking at clues about how Shell aims to boost its core strengths – LNG and oil production.
Compared to the U.S. supermajors ExxonMobil and Chevron, Shell has a lower reserves replacement ratio for oil and doesn’t have too many years of oil reserves in its portfolio.
“While Shell has some near-term growth, we think visibility beyond this is weak and will need to be supplemented with M&A,” RBC Europe analyst Biraj Borkhataria wrote in a note carried by Bloomberg.
Analysts will also want to hear more about the LNG portfolio of Shell, which is the world’s biggest LNG trader.
Shell last month said in its annual LNG report that global LNG demand is set to surge by 60% through 2040, pushed up by Asia’s economic growth.
