MOSCOW (MRC) -- The ongoing transition to low-carbon energy sources may accelerate as economies recover from the impact of the coronavirus crisis, reported Reuters with reference to the head of oil and gas company Royal Dutch Shell's statement.
Chief Executive Ben van Beurden said while Shell was not ringfencing its low-carbon Integrated Gas and New Energies division from spending cuts to weather the crisis, those businesses would be shielded from the worst of the reductions.
"Where possible, we try to spare (New Energies) a little bit and that is basically because we still believe that there is an energy transition underway which may even pick up speed in the recovery phase of this crisis and we want to be well positioned for it," he said after Shell announced first-quarter results.
Under pressure from a slide in oil prices, Shell slashed its dividend by two-thirds on Thursday having already announced a USD5 billion cut to its 2020 investment budget to USD20 billion last month.
About 45% of the spending cuts will hit Shell’s upstream - or exploration and production - business, with 30% for downstream which includes the refining and marketing of oil products, van Beurden said.
He said the other 25% in cuts would come from Integrated Gas and New Energies but added that the crisis would not distract the company from its shift to low-carbon energy as it braces for a complete overhaul over the next 30 years.
The head of the world’s energy watchdog, Fatih Birol, told Reuters this week that global efforts to minimise the fallout from the pandemic presented an historic opportunity to scale up the technologies needed to move to cleaner energy.
The European Union, meanwhile, is working on a revised work plan for its climate policies because of the crisis which is set to include new, more ambitious targets for 2030, according to a draft seen by Reuters.
Shell’s low-carbon energy division, which includes wind and solar energy and retail power distribution, was due to receive investment of up to USD2 billion in 2020 and then up to USD3 billion a year thereafter.
Chief Financial Officer Jessica Uhl said the fundamental outlook for Shell’s focus on shifting from liquid fuels to generating and distributing electricity had not changed.
"Companies growing low-carbon businesses should eventually be rewarded by the market, and ultimately we see this as the most likely way for Shell to rebuild its ambition to be a world- class investment case over the longer term," Barclays equities analysts said in a note.
As MRC reported earlier, Pilipinas Shell Petroleum Corp said it will shut down its 110,000-barrel-per-day Tabangao refinery in the Philippines for one month from mid-May as the coronavirus pandemic has hammered oil demand.
We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island this week following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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