It must be tempting for Ben van Beurden to crow, “told you so,” to critics who questioned his decision to commit Royal Dutch Shell to the $50bn takeover of BG Group during the depths of the oil market downturn in 2015.
Two years later, the enlarged group is generating more cash at oil prices of less than $60 a barrel than it did when crude was trading below $100. More than $10bn of annual operating costs and $20bn of capital expenditure have been stripped away, and net debt is on course to end the year $17bn lower than at its peak after the BG deal.
Yet, Mr van Beurden, chief executive of Shell, allows himself only the briefest self-congratulation. “All the milestones, we are either ahead or on track,” he tells the Financial Times, referring to targets set at the time of the takeover. “But you are never done in this industry because everything is always in continuous decline.”
Investing in tech ‘we don’t understand’ outweighs perils of moving too slowly, says chief
The Dutchman is talking about the relentless pressure to find new resources to replace existing production. But, increasingly, there is an even bigger worry: that demand faces long-term decline as the world begins to shift away from fossil fuels.
For Mr van Beurden, the need to prepare Shell for a lower-carbon energy system is complicating an already tricky balancing act between investing for future growth and meeting promises made at the time of the BG deal to return $25bn to shareholders by the end of the decade.
Total’s €237.5m acquisition last month of a stake in Eren, a French renewable power company, showed how large oil and gas companies are making tentative steps into cleaner technologies. Shell is active in renewables and biofuels but Mr van Beurden says he will not be rushed into larger bets.
“The point that you can be too early was proved by us,” he says. “We were among the first of the big international oil companies to get into solar and we found out we could not make any money out of it.”
Share this:
