Shell pops the hood on its energy transition strategy: Fuel for Thought

The internal combustion engine faces an expiry date as the transportation sector moves decidedly towards electrification. Plastics and heavy transportation will not sustain high oil demand on their own. The question is whether the inevitable energy transition from liquid transportation fuels to electricity will take a few years or several decades. Either way it poses an existential threat for oil companies. For oil majors, the latest climate-related setback has been financial in nature, with institutional investors, including sovereign wealth funds, concerned about long-term positions in fossil fuels. In October 2018, BP’s Bob Dudley publicly defended oil majors, in light of fossil fuel divestments and concerns that oil assets could be written off at scale if the energy transition were to accelerate. He argued that oil companies are best placed to lead the energy transition. When Norway’s Statoil changed its name to Equinor, oil traders joked that it sounded more like a pharmaceutical company, but they also acknowledged the hard realities behind the oil major’s shift toward becoming an energy company. The supermajors have an unenviable task ahead — timing their diversification strategy right, ensuring current supply is not disrupted, continuing to pay high dividends and implementing a transition plan that… continue reading

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