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According to Sources, Shell Is Set to Unveil a Major Restructuring Plan to Cut Costs in Its Oil and Gas Division and Firm Up Investments in Renewable Energy, Aiming for Energy Transition
The energy transition scenario is becoming increasingly strong worldwide, and major oil and gas companies are looking to redirect their investments toward the renewable energy sector. Following the example of giants BP and Total, Shell is planning to cut operational costs and resources in new projects by 30% to 40%, according to sources speaking to Reuters.
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According to sources, Shell is expected to announce a major restructuring by the end of 2020, possibly the largest in the company’s modern history, reflecting recent moves to reduce its focus on oil and gas exploration and production over the next decade and build new business models in the renewable energy sector.
According to a spokesperson for Shell in a statement, the company is undergoing a strategic review of the organization, aiming to ensure it is prepared to thrive during the energy transition and is currently evaluating a range of options and scenarios.
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Expected to be finalized this year, Shell’s cost-revaluation plan, called “Project Reshape,” will target three main areas with the goal of cutting costs to meet the $4 billion target set at the onset of the coronavirus crisis.
Key Areas to Be Affected by Shell’s Cost-Cutting Plan
In the oil and gas production sector, Shell is expected to focus on only a few crucial regions, such as the Gulf of Mexico, Nigeria, and the North Sea, according to sources.
Additionally, according to the sources, in the fuel distribution area, cost cuts will occur in the network of 45,000 Shell stations, the largest in the world.
In the company’s gas sector, there will also be costs related to Liquefied Natural Gas (LNG) operations and gas production, as addressed by the sources.
Oil Companies Are Focusing on the Global Renewable Energy Market
Shell is not the only major oil company adapting its projects to the energy transition. BP (British Petroleum), Total, and others in Europe have announced business plans aimed at operations in the renewable energy market, as clients, governments, and investors increasingly demand changes for a low-carbon scenario.
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