Saturday 19 October 2019

'Greener' Shell pledges to boost shareholder returns

Cleaning up: Shell CEO Ben van Beurden says its spending plans are in line with energy transition targets
Cleaning up: Shell CEO Ben van Beurden says its spending plans are in line with energy transition targets

Ron Bousso

Royal Dutch Shell has outlined plans to boost shareholder returns after 2020, while also increasing spending on oil, gas and power, as it capitalises on years of cost-cutting to prepare for a lower-carbon future.

In a strategy update, the Anglo-Dutch energy company said it was on track to deliver on its commitment to sharply increase cash generation and carry out one of the world's largest share buyback programmes of $25bn (€22bn) by the end of next year.

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It then plans to increase payouts to investors through dividends and share buybacks to $125bn (€111bn) between 2021 and 2025, roughly half of its current market value. That compares with payouts of around $90bn between 2016 and 2020.

While offering sweeteners to investors, Shell also outlined plans to increase spending in the next decade to grow its gas, oil, renewables and power output.

The oil sector saw a sharp drop in spending in the wake of the 2014 price crash, but in recent months companies including Exxon Mobil and Chevron have flagged plans to increase spending again.

Shell said its cash capital investment would average $30bn a year between 2021 and 2025, with a ceiling of $32bn. The target excludes major acquisitions.

Shell has in recent years vowed to keep spending at the lower end of a $25-30bn range. It spent $24.8bn in 2018.

The planned increase in spending came as Shell set out the sector's most ambitious targets to reduce greenhouse gas emissions from its operations in an effort to comply with the 2015 Paris climate agreement.

CEO Ben van Beurden said Shell's spending plans remained in line with the energy transition, even as some investors say global investments in fossil fuel need to slow down in order to hit the Paris targets.

Shell shares were down 0.8pc at 1100 GMT compared with a 0.05pc decline for the broader energy sector.

Shell plans to focus on growing its power business, which it sees as key in its transition to cleaner energy, with an annual investment of $2 to $3bn in the five years to 2025. Since 2016, it has invested $1.6bn in new energies including power.

The company plans to increase power generation using gas and renewable sources of energy such as wind and solar, and also expand in power trading. It is targeting returns of 8pc to 12pc in the power sector, far higher than the average returns in the sector.


Irish Independent

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