Shell Splits Power Division and Scales Back Offshore Wind

Shell Plc (NYSE:SHEL) has announced plans to cease new offshore wind investments and is splitting its power division as CEO Wael Sawan looks to boost the company’s profitability.

“While we will not lead new offshore wind developments, we remain interested in offtakes where commercial terms are acceptable and are cautiously open to equity positions, if there is a compelling investment case,” a company spokesperson said in a statement carried by Reuters. 

Shell appears to be systematically scaling back its clean energy investments. Earlier in the year, the company ditched plans to build a low-carbon hydrogen plant on Norway’s west coast due to a lack of demand.

“We haven’t seen the market for blue hydrogen materialize and decided not to progress the project,” a Shell spokesperson told Reuters.

Shrell’s announcement came hot on the heels of a similar move by oil and gas giant, Equinor ASA (NYSE:EQNR). The Norwegian state-owned multinational energy company announced that  it will not move forward with plans to build a pipeline to carry hydrogen from Norway to Germany with partner RWE (OTCPK:RWEOY), citing a lack of customers as well as an inadequate regulatory framework. Equinor was to build hydrogen plants that would enable Norway to send up to 10 gigawatts per annum of blue hydrogen to Germany.

“We have decided to discontinue this early-phase project. The hydrogen pipeline hasn’t proved to be viable. That also implies that hydrogen production plans are also put aside,” an Equinor spokesman told Reuters.

Exxon Mobil Corp. (NYSE:XOM) CEO Darren Woods has urged companies to stop focusing on certain energy sources, such as renewable energy, to save the climate, warning that it would be a “huge mistake to be picking winners and losers and focusing on specific technologies”,

Instead, “we need to look more broadly and let the markets figure out which solutions deliver the most emissions reductions at the lowest cost,” Woods said.

Woods argued that an attempt to quickly move away from oil and gas immediately could be disastrous for clean energy, adding that producing less LNG, for example, could lead to higher demand for dirtier fuels such as coal. 

By Alex Kimani for Oilprice.com

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