The journey to net zero was never going to be easy but volatile market conditions appear to have stranded Shell at a crossroads, torn between the seemingly inevitable pull of the energy transition and the demands of its shareholders.
This is evident in the big shareholder returns that it and most other energy majors have vowed to maintain even though oil prices have softened and the global economic outlook is cloudy. This will put the sector under pressure, and in the case of Shell was a contributor to the additional debt the company took on in the final quarter of 2024.
The company has kept tight control on its spending and chief executive Wael Sawan says it will continue to do so in "a year of uncertainty and volatility".
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Notably, savings in 2024 were boosted by the decision to pause a major biofuels project in Rotterdam. According to a fresh analysis by environmental and human rights group Global Witness, Shell's spending on oil and gas in 2024 eclipsed that spent on renewables by more than seven times over.
Mr Sawan has been focused on cost-cutting and operational efficiencies since June 2023 when he announced a 10-quarter "sprint" to "buy the gap" between Shell's relatively low valuation and that of its US peers. This kicked off what is now 13 consecutive quarters of share buybacks worth at least $3 billion each.
Mr Sawan has further warned that if this persistent valuation gap doesn't narrow, he will consider moving Shell’s listing to New York. This, incidentally, will be the location of a major strategy update due to be delivered by Shell on March 25.
The focus on cost-cutting has not been accompanied by a broader vision for Shell's future, but investors are increasingly focusing on what comes next for the UK's most valuable listed company. If that does involve a New York listing it will be a major blow for the London Stock Exchange, which has been struggling to attract and retain high-profile companies.
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