In an interview with The Times, Wael Sawan, the new CEO of Shell, said that the company is reviewing its previous decision to wind down its crude oil production by around 2% each year this decade.
Shell said in 2021 that its peak oil production had been in 2019, with this set to gradually decline over 30 years as the company focused increasingly more on renewables and low-carbon energy. Since then, weaknesses have been exposed in the energy system, most notably by the market dislocation resulting from Russia’s invasion of Ukraine and the post-pandemic resurgence in the demand for oil.
Sawan said such events clearly demonstrate:
“The fragility of the energy system when we starve it of the supply that is required…I am of a firm view that the world will need oil and gas for a long time to come. As such, cutting oil and gas production is not healthy.”
Shell, which also makes automotive lubricants like commercial vehicle oil, will use its June capital markets day to provide further clarification about its new targets for gas and oil production.
The development follows BP’s February announcement that it had updated its strategy to include greater gas and oil production, at least in the short term, with an additional billion dollars of investment in oil and gas projects each year on average through to 2030.
BP’s previous goal of cutting oil and gas production by around 40% by the end of the decade, compared to 2019 levels, has consequently been revised to 25%.