Is it net zero or adding zeroes to earnings and cash flow for Shell? The new boss at Shell has signalled a shift in the company’s strategic priorities as he announced plans to keep pumping oil at current levels out to 2030.
This will underpin a higher dividend – with a notable increase in the proportion of cash flow which will be returned to shareholders.
AJ Bell’s Russ Mould said: “The move by Wael Sawan will likely be welcomed by shareholders as it puts Shell more in line with its US peers. He is signalling that renewables and clean energy projects are all well and good but they must pay their own way and if the returns projected are too weak, they won’t make the cut.
“In principle this is good business sense, however, the situation is a little more nuanced. As the effects of climate change become more obvious, political and regulatory pressures will ramp up.
“Already Shell is having to fight a Dutch court ruling ordering the company to cut its emissions. In the short-term, maintaining oil production undoubtedly makes financial sense but doing so exposes the company to new risks too.”
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