According to sources, Shell is expected to disclose a major restructuring plan to cut costs in the oil and gas division and firm investments in the renewable energy sector, with a view to the energy transition.

The energy transition scenario is getting stronger in the world and large oil and gas companies are seeking to redirect their investments towards the renewable energy sector. Following the lead of giants BP and Total, Shell is planning to cut operating costs and resources by 30% to 40% on new projects, sources told Reuters.

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According to the sources, Shell is expected to announce a major restructuring by the end of 2020, perhaps the largest in the company's modern history, which reflects recent moves to reduce its focus on exploration and production of oil and gas in the next decade and build new models of business in the field of renewable energy.

According to a Shell spokesperson in a statement, the company is undergoing a strategic review of the organization, with the aim of ensuring it is prepared to thrive during the energy transition and that it is looking at a range of options and scenarios at this time.

Estimated to be finalized this year, Shell's cost revaluation plan, called "Project Reshape", should reach three main areas and is intended to cut the $4 billion target set at the beginning of the coronavirus crisis.

Key areas to be hit by Shell's cost-cutting plan

In the oil and gas production sector, Shell is likely to focus on just a few key regions such as the Gulf of Mexico, Nigeria and the North Sea, according to the sources.

Still according to the sources, in the area of ​​fuel distribution, cost cutting should take place at Shell's network of 45 service stations, the largest in the world.

In the company's gas area, there will also be costs with regard to Liquefied Natural Gas (LNG) operations and gas production, as discussed by sources.

Oil companies have focused on the global renewable energy market

Shell is not the only major oil company adapting its projects to the energy transition. A BP (British Petroleum), Total and others in Europe have announced business plans towards operations in the renewable energy market, as customers, governments and investors increasingly call for changes to a low-carbon scenario.