Oil giant Shell is considering a major global review of its oil and gas production and is looking at sustaining production on few hubs in Nigeria to facilitate its new energy initiative.
Subsequently, the Shell Energy has announced that it will be making sweeping cuts to its oil and gas production business to free up cash to spend on renewable energy.
By cutting day-to-day operating costs and reining in spending on new projects, the energy firm hopes to slash costs by as much as 40 per cent.
As part of this operational shift, Shell will now focus much of its oil and gas production on a few key hubs, such as Nigeria, the Gulf of Mexico and the North Sea. The company will also trim costs at its 45,000 petrol stations.
The company’s restructuring has two purposes. Firstly, it will help the provider survive the COVID-19 crisis, which has hugely reduced the demand for oil.
Many analysts now believe that demand for fuel will never again reach 2019 levels, as the COVID-19 pandemic has grounded planes, taken cars off the road and disrupted industry. Secondly, the shift to renewables will also help the company prepare for the upcoming green ‘energy transition’.
For this reason, the shift to renewables is not just a structural shift, but a cultural one that will set the company up for the future.
Shell’s green ‘energy transition’ is a wider consideration for all energy suppliers. In recent months, energy firms have come under huge pressure to invest in renewables and move away from fossil fuels to help the UK reach its ‘net zero’ carbon emissions target by 2050.
In addition to this, the government is looking to incentivise suppliers to go green by placing a new levy on gas suppliers.
The Green Gas Levy which was initially proposed in the March 2020 budget aims to prevent as much as 21.6 million tonnes of carbon emissions from entering the atmosphere.
This is the equivalent of planting 71 million trees and the levy will also support the injection of renewable biomethane into the gas grid through the new Green Gas Support Scheme.