Proactive Investors - Shell PLC (LON:SHEL) boss Wael Sawan has bluntly warned that oil and gas companies should not be cutting production, claiming the move could be “dangerous”.
Sawan argued the world still “desperately needed” oil and gas in response to backlash from climate activists over the company’s backtracking on plans to cut production.
"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,” he told the BBC on Thursday.
Shell scrapped plans to cut oil production by up to 2% each year until 2030 in last month’s capital markets day, amid a move to bump up shareholder distributions.
Climate groups hit out at the move, accusing the oil giant of placing shareholder pay-outs above the climate and previously laid out net zero targets of 2050 “or sooner”.
UN head António Guterres then classed continuing investment in climate-impacting oil and gas as “economic and moral madness,” to which Sawan responded, “I respectfully disagree”.
Sawan argued that Russia’s invasion of Ukraine had prompted poorer nations to miss out on liquified natural gas shipments last year as northern Europe scrambled to ensure supply.
Shell had reported record profit of US$40bn during 2022 meanwhile, thanks to higher prices of oil and gas caused by the squeezed supply.
“If we're going to have a transition it needs to be a just transition that doesn't just work for one part of the world,” Sawan said.
Shares in FTSE 100-listed Shell fell 1.2% following the news.