Shell Abandons Oil Cuts, Seeking Higher Profits

What's the story?

• Despite Shell's earlier commitment to oil production cuts, the company decided to prioritize shareholder profits, keeping oil production steady until 2030. 
• In 2021, Shell committed to gradually reducing oil production by 1-2% each year, making modest fossil fuel divestments, and increasing gas production and exports.
• Shell claimed that it had already met its reduction goals, providing the example of its 2021 drop in output when production went from 1.9 million barrels a day to 1.5 million barrels a day after the sale of its holdings in the oil-rich Permian Basin, Texas. 
• A Shell spokesperson said:

"Our target of a reduction in oil production by 2030 has not changed. We've just met it eight years early."

• Shell currently ranks among the top 10 polluters globally and, in 2018, was mandated to reduce CO2 emissions by 45% by a Dutch court in a case brought against the oil giant by Milieudefensie.

A focus on shareholders

• Shell's new CEO, Wael Sawan, has abandoned the plan to reduce production each year for the rest of the decade. Sawan replaced Ben van Beurden in Sept., who had previously set a target of achieving net zero carbon emissions by 2050 with modest reductions in fossil fuel investment.
• Sawan said:

"The answer cannot be, 'I am going to invest [in clean energy projects] and have poor returns, and that's going to vindicate my conscience.' That's wrong."

• He emphasized wanting to "reward our shareholders today and far into the future." Sawan announced a 15% planned dividend increase and a share buyback scheme to distribute $5 billion to investors.
• Shell announced it will invest $40 billion in oil and gas production between 2023 and 2035. It will maintain oil production at the current level of 1.4 million barrels daily and will expand its giant liquefied natural gas interests.
• During the same time period, Shell will invest between $10-15 billion in "low-carbon" products like biofuels, electric vehicle charging, and carbon capture technology.

What are people saying?

• Carla Denyer, from the U.K. Green Party, said:

"For Shell to target more fossil fuel production and to increase payouts to shareholders is pure climate vandalism, and a sign that fossil fuel companies will not steer us to the greener future we all crave without political leadership from national governments."

• On the same day as Shell's announcement, International Energy Agency (IEA), an energy watchdog, stated that the peak global demand for oil would occur before the decade's end.
• The IEA has warned that new oil and gas field development will need to end immediately if we are to meet net-zero goals by 2050 and prevent a climate catastrophe.
• A paper published in Harvard Environmental Law Review titled "Climate Homicide: Prosecuting Big Oil For Climate Deaths" argues that Big Oil should be charged with homicide for its role in the climate crisis.

How do you feel about Shell's broken promise?

—Emma Kansiz