More drilling, more profits

Shell and its shareholders are doing well as a consequence of its new CEO’s decision to pump more oil and gas, rather than less. Europe’s biggest energy company posted better-than-expected profits yesterday of $28 billion for 2023, and said it would raise its dividend by 4 per cent. Profits were down from a record $40 billion the year before – boosted by the war in Ukraine – but still enough for Wael Sawan, the new boss, to promise share buybacks worth $3.5 billion in the first quarter of this year. Activists were dismayed but shouldn’t be surprised. The lesson oil majors’ boards and C-suits have taken from lavishly promoted efforts to be seen to be transitioning to renewables over the past decade is that markets don’t like them. Shell added 200,000 barrels of oil equivalent a day to its output last year and Sawan plans to raise that figure by another 500,000 by next year. So much for the International Energy Agency’s dramatic switch in 2021 to advocating a halt to new oil and gas exploration. It no longer speaks for the industry.