British-Dutch multinational oil and gas company, Shell is working to grow its annual organic free cash flow up to $9-12 billion by 2025, the company said as part of its investor update information.
The oil giant also added that the company plans to invest $7-9 billion a year in downstream annually.
Shell expects its marketing division to generate more than $2.5 billion of additional revenue by 2025, chemical earnings to reach $3.5-4 billion by 2025 apart from lowering of indicative integrated break-even margins by 2020 as compared to 2011-2013 period.
“Our unique Downstream business is fundamental to delivering a world-class investment case. Its unparalleled breadth, depth and the strength of our brand make our Downstream business highly competitive, helping to generate strong free cash flows and returns, while making Shell more resilient over the coming decades,” Ben van Beurden, Chief Executive Officer (CEO) said.
The company claimed that its marketing business (Retail and Global Commercial) is the largest and the most profitable marketing business among international oil companies and added that the marketing business alone represented around 50 per cent of its downstream earnings in the last five years and generated $1.4 billion in additional earnings in 2017.
John Abbot downstream director at Shell said, “This business will continue to create value for shareholders and customers. We believe our Marketing business is the most profitable in the industry, and Chemicals had a record year in 2017. Meanwhile, our refining and trading teams make the most of our scale, global presence and customer reach. We have a unique strength in our brand and a fully integrated business model that our competitors find difficult to match.”
The company expects its retail and global commercial business to generate more than $1 billion in additional annual earnings by 2020 and more than $2.5 billion by 2025 with an average annual growth rate of more than 7 per cent
On the retail side, the company is aiming at 40 million daily footfall across 55,000 sites by 2025 from 30 million across 44,000 sites currently. It expects its annual earnings from retail to grow to $4 billion by 2025 from $2.2 billion in 2017 on the back of setting up of more than 10,000 new sites of which 5,000 will be located in China, India, Indonesia, Mexico and Russia.
The company said it expects annual earnings from lubricants to touch $2.5 billion in 2025 and $400 million by 2020 from $1.4 billion in 2017. The company hopes to achieve 70 per cent penetration of passenger car motor oil segment by 2025 from around 40 per cent in 2017 on the back of increased focus in markets of China, India, Indonesia, Mexico and Russia.
The company also plans on undertaking $2-3 billion annual capital investment in its refining and trading business and $3-4 billion annual capital investment for ramping up its chemical business. It expects to clock $3.5-4 billion in earnings from its chemical business in 2025.