Shell CEO Wael Sawan is considering whether or not to continue building on the company’s record earnings from last year by increasing oil production.
- While the London-based energy company’s investors would applaud increased revenue, increased production would likely result in complaints from environmentalists.
- Many critics want Shell to prioritize investment in climate-related activities. Those same critics would see increased oil production as a step back from that goal.
- Though Sawan says the company is still committed to lowering its overall emissions, he recognizes that the greatest profit potential lies with oil and gas, The Wall Street Journal reports.
- Additionally, Sawan believes Shell’s fossil fuel profits should not support renewable and low-carbon energy options. The alternative energy options should be able to support themselves.
- As Sawan looks at the energy company’s portfolio, he is considering revising Shell’s previous commitment to reduce crude output by 1% to 2% each year until 2030.
Why it’s news
Shell’s board and team of executives still have not made any official decisions about changes, but Sawan says that the outcome will probably be unpopular with some groups. The company plans to update its investors by June 14 in New York.
Balancing the public outcry for more renewable energy options with the profitability of fossil fuels is a difficult challenge for all energy companies right now. Shell, however, has a particularly difficult time finding this balance. Following a 2021 court case, a Dutch court ordered Shell to reduce its carbon emissions, claiming it is partially responsible for climate change. Shell is appealing the ruling, The Wall Street Journal reports.
Last year, energy companies saw a spike in revenue as energy prices soared due to Russia’s invasion of Ukraine. Critics have suggested that the companies should not have profited during potential energy shortages.
Shell has been a particular target of climate activists and critics, as evidenced by last year’s London shareholder meeting. The event was delayed nearly three hours after activists glued themselves to chairs protesting Shell’s spending on fossil fuels.
Two years ago, as part of its commitments to environmentally conscious business, Shell committed to halting all new frontier exploration by 2025. This would mean that the company would not search for new drilling opportunities. However, as oil demand rises, Shell may change course.