Shell has been accused of an “utterly destructive” decision as it decided to stop reducing the amount of oil it produces until 2030, as part of a plan it hopes will increase its share price.
The UK-headquartered energy group dropped its plan to reduce oil production by between 1% to 2% each year of this decade.
However, it declared victory, stating the target was reached eight years early after it sold off oil fields to others, which will extract that oil instead.
“We have achieved that reduction earlier than expected through targeted divestments,” Zoe Yujnovich, the head of Shell's upstream business, told Wall Street on Wednesday.
It was part of a wider bid by new chief executive Wael Sawan to hike the share price of Shell, promising markets that the age of fossil fuels was not over, to increase payouts to shareholders and to up profits.
“We haven’t minced our words around this, the world is under-investing,” in oil and gas, he said shortly after finance boss Sinead Gorman proclaimed that “our stock is undervalued”.
Speaking at the New York Stock Exchange, Sawan said the volatility seen after Russia fully invaded Ukraine showed oil production must remain at current levels.
“I think [this] speaks volumes to the fragility of the overall system and therefore what we need to do is to continue to make sure that while we are continuing to grow - as we must - low carbon investments… you need that investment to be able to at least hold [fossil fuel production] flat, if not grow.”
Later, on a call with reporters, Sawan added: “This is not a company that’s turning its back on oil and gas.
“Neither is it a company that is all renewables; either is it a company that’s tripling down on oil again.”
Sawan was not asked how divesting oil fields helped combat climate change, but speaking about a court case in the Netherlands which would force Shell to slash emissions by 45% by 2030 if it loses, he said that simply getting rid of customers would not make any difference to climate change.
“Sadly, the outcome would be we would simply let go of customers, we would stop selling.
“We would look at what’s the least profitable molecules and say, ‘somebody else will sell’, and we will achieve the 45%.
“It will not make a difference at all,“ continued Sawan. “It will take away opportunities which we think are critical for us to transition because those are the customers we’re trying to decarbonise.”
Shell's decision sparked widespread criticism as green campaigners warned of the “climate-wrecking” impact it might have on the planet.
Campaign group Global Witness estimated the decision to declare victory on the 1% to 2% target means Shell could now produce an average 29 million tonnes of extra carbon per year – almost as much as Denmark emits annually.
Shell told the PA news agency it believes those figures, based on data from energy analysts Rystad, to be “nonsense”.
Jonathan Noronha-Gant, senior campaigner at Global Witness, said: “Record profits off the back of the energy crisis should be boosting up green investment.
“Instead it’s shareholder payouts and a doubling down on climate-wrecking fossil fuels. It will always be profit over people and planet for polluters.”
MP and Green Party co-leader Caroline Lucas said the move is “utterly destructive”, adding: “Fossil fuel giants like Shell are climate criminals, polluting our planet at will and reaping record profits for their own shareholders.”
At its New York capital markets day, Shell also made it clear it did not have an advantage in the renewable power sector, saying it had sold sites in Ireland and France.
The plan to become the world’s largest electricity company, announced just four years ago, was out of the window, Sawan said.
“Many of you are asking if we are going to be the biggest power company,” he told reporters. “We’ve now hopefully answered that question by saying no.”
He added: “Unfortunately, the energy transition is complex, those who double down on offshore wind alone struggle today; those who doubled down on only oil struggled four or five years ago.”
It is also busy trying to find a buyer for its household energy supplier Shell Energy in the UK and other countries.
Instead, the group sees some of its renewable future lying in places where it can tap into its traditional business.
For instance, using the benefit of having thousands of forecourts around the world, Shell hopes to grow the number of electric vehicle charging points it owns from 30,000 to 200,000 by the end of the decade.
It appeared to focus largely on urban areas, where drivers might not have the space for a charger at home.
The company also said electric cars can bring other benefits to its old petrol stations. The average electric driver spends around twice as much on food and other items when they wait for their car to load up.
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
