Shell chief executive Wael Sawan said it would be “dangerous and irresponsible” to cut oil and gas production as demand changes could cause further price spikes.
In a wide-ranging interview with the BBC Mr Sawan, who took the helm at the London-headquartered supermajor at the start of this year, said the world still “desperately needs oil and gas” as cleaner sources could not be brought online fast enough to meet demand.
Shell (LON:SHEL) said last month that it will commit more investment to oil and gas and temper renewables investments to those with the greatest payback, a strategy that was dubbed “catastrophic” by climate activists.
Meanwhile, both the company’s renewable energy VP and its head of UK offshore wind have departed the group in recent weeks.
Challenged over whether prolonging oil and gas production would help society’s most vulnerable, he added: “What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again.”
Speaking to the Times earlier this year, Mr Sawan said that he would “think twice about investing in more oil in the UK” as there were “more attractive locations right now”, such as the US Gulf of Mexico.
Shell has said it intend to invest £25bn in the UK over the course of the decade, but the government’s Energy Profits Levy (EPL) and public pushback over key projects such as Jackdaw and Cambo – the latter of which Shell is now exiting – have done little to aid its plans.
“Ultimately the government needs to make a call as to their views on imported versus domestic production,” Mr Sawan told the BBC.
“When you do not have the stability you require in these long-term investments, that raises questions when we compare that to other countries where there is very clear support for those investments.”
‘Never rule out’ US HQ move
Mr Sawan also reflected on a recent visit to the New York Stock Exchange as part of an investor briefing, where the company received an “exemplary” welcome.
It comes as the company faces questions over whether it would consider relocating its headquarters to US, where finance and investment are perceived to be more supportive of oil and gas companies.
“They said we continue to value a company that provides us the energy we desperately need. That resonated with me as a person who comes from Lebanon where we are starved of energy,” he added.
At the same time, Shell faces a “significant undervaluation” of its shares in relation to US counterparts – a fact acknowledged by the CEO in the company’s most recent quarterly results.
However, speaking with the BBC he ruled out the prospect of a move – at least in the short term.
“There are many who question whether that valuation gap can only be bridged if we move to the US. A move of headquarters is not a priority for the next three years,” he said
“I would never rule out anything that could potentially create the right circumstances for the company and its shareholders. Ultimately, I am in the service of shareholder value.”
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