Dutch oil giant Shell has undergone a significant shift in its energy strategy.
According to Reuters, Shell is withdrawing from new offshore wind investments and splitting its power division after a wide-ranging review of businesses that were once seen as key drivers of the company's energy transition strategy.
Regarding the adjustment of the energy strategy mentioned above, on December 11th, a Shell spokesperson told Interface News that the company will be committed to maximizing the value of its existing renewable energy generation platforms.
Although we will not lead new offshore wind power development projects, we still maintain a strong interest in output projects with reasonable commercial terms, and we will adopt a cautious and open attitude towards equity investment when there are sufficient investment reasons
The spokesperson also stated that by making targeted investments in renewable energy generation and storage systems, combined with the company's knowledge in electricity trading and B2B sales, it will be possible to create more value with less emissions.
Shell believes that in some markets, as renewable energy plays an increasingly important role in the electricity market, utilizing batteries and flexible gas-fired power plants to manage intermittency issues can better meet customer needs.
Shell is one of the five major international oil giants, headquartered in The Hague, Netherlands, with 103000 employees and operations in over 70 countries.
Offshore wind power was once a key market for Shell's investments. According to the company's official website, its offshore wind power installed capacity in operation and construction exceeds 2 GW, and it has over 7.9 GW in potential projects (Shell equity) in North America, Europe, the UK, and Asia. The company has also invested in next-generation wind energy technologies, including floating wind power.
In recent years, the wind power industry has been impacted by soaring costs, supply chain issues, and rising interest rates, resulting in shrinking profit margins and prompting companies to re-examine their investments.
Since the beginning of this year, Shell has made multiple contractions in the renewable energy sector and has gradually withdrawn from multiple offshore wind power projects.
In February, Shell sold its stake in the MunmuBaram project in South Korea; In March, Shell sold a 50% stake in the SouthCoast Wind project in the United States; In July, Shell sold its stake in a joint venture project with Iberdrola's Scottish Electric Renewable Energy Company; In November, Shell sold its equity in the Tablas Strait 1, 2, and 3 projects in the Philippines.
In addition, Shell has also reduced its solar and hydrogen energy businesses in recent months, selling its retail electricity business, refineries, and some oil and gas production businesses.
In March of this year, the company lowered its carbon reduction target for 2030 by reducing the total "net carbon intensity" (i.e. emissions per unit of energy) of all energy products sold to customers by 20% between 2016 and 2030, and cancelled its target for 2035, citing strong expected natural gas demand and uncertainty in energy transition.
But the company's goal of achieving net zero emissions by 2050 has not changed.
At the same time, other oil companies have also joined the ranks of slowing down the development of renewable energy.
In January of this year, BP and Equinor terminated their agreement to sell electricity from their proposed Empire Wind2 offshore wind farm to New York State, citing rising inflation, rising borrowing costs, and supply chain issues.
In addition, Equinor has gradually abandoned offshore wind power projects in Vietnam, Spain, Portugal, and France since the beginning of this year, and has reduced its offshore wind power plans in Australia. Equinor has also cancelled plans to produce blue hydrogen in Norway and export it to Germany.
Blue hydrogen refers to a type of hydrogen energy that uses fossil fuels to produce hydrogen while capturing, utilizing, and storing (CCUS) the released carbon dioxide to reduce greenhouse gas emissions.
But its production cost is relatively high. According to data from the International Energy Agency (IEA), the average cost of producing hydrogen globally in 2021 for blue hydrogen using CCUS technology is approximately $1.5-3 per kilogram (approximately RMB 10.9-21.79 per kilogram).
On September 16th, BP announced plans to sell its existing onshore wind energy business, BP WindEnergy, and hopes to integrate the development of onshore renewable energy projects through Lightsource BP.
BP WindEnergy owns ten onshore wind energy assets in seven states in the United States and is responsible for operating nine of them. The total power generation of these assets is 1.7 GW.
On November 21st, Equinor announced that it will lay off 20% of its employees in the renewable energy division. According to insiders of the company, it is affected by factors such as rising costs, high interest rates, and supply bottlenecks.
According to statistics from the US Energy Information Administration and IEA, in the year since October 2023, the total installed capacity of offshore wind power projects that have been announced to be withdrawn or postponed globally has reached at least 6 million kilowatts, equivalent to more than half of the newly added offshore wind power installed capacity for the whole of last year.
Although renewable energy is an important direction for future development, in the current market and economic environment, oil companies are clearly more inclined to focus on their core businesses.
On December 5th, Equinor and Shell announced plans to merge their offshore oil and gas assets in the UK to form a new company focused on the North Sea, in order to maintain domestic oil and gas production and energy supply security in the UK. Both parties will hold 50% of the shares, and the transaction is expected to be completed by the end of 2025.
In terms of performance, Shell's adjusted profit for the third quarter of this year was 6.028 billion US dollars, a year-on-year decrease of 3.15%; In the first three quarters, it was $20.055 billion, a year-on-year decrease of 4%.
Equinor's adjusted profit for the third quarter was $2.191 billion, a year-on-year decrease of 25%; In the first three quarters, it was 7.444 billion US dollars, a year-on-year decrease of 21%