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The Guardian - UK
The Guardian - UK
Jillian Ambrose Energy correspondent

Shell angers climate activists with plan for $23bn shareholder payout

Shell petrol pumps
Shell reported a record annual profit of $40bn for 2022. Photograph: Yui Mok/PA

Shell has angered climate campaigners with plans to pay shareholders at least $23bn in rewards this year, despite falling profits, as it prepares to cut hundreds of jobs from the oil company’s low-carbon division.

Shell’s chief executive officer, Wael Sawan, told investors to expect payouts “well in excess” of expectations, just days after setting out plans to cut up to 25% of the staff working in Shell’s low-carbon solutions team.

The oil and gas company said on Thursday that it planned to hand its shareholders a $3.5bn windfall from its share buyback programme over the coming months. This would take the total shareholder payouts, including dividends, to $23bn for the year even as the company makes weaker profits.

Shell’s multibillion-dollar shareholder windfall has angered green groups and social justice campaigners who have called for more of the company’s cash to go towards investment in renewable energy or reducing energy bills via tougher government taxes.

The shareholder payouts are more than six times the amount Shell plans to spend on renewable energy this year. The company invested about $3.5bn in its renewables and energy solutions business in 2022, 14% of its total capital spending.

Shell plans to maintain this level of spending despite earlier this year reporting a record annual profit of $40bn for 2022. Shell has reported that its existing renewables and energy solutions investments have been loss-making over the first nine months of 2023.

Sawan set out plans last week to shrink the number of Shell staff working on low-carbon solutions by about 200 next year, after vowing to shift Shell’s focus towards high-profit oil projects and expanding its gas business when he became chief executive in January.

Charlie Kronick, a senior climate adviser at Greenpeace UK, said:“People are sick of watching oil bosses feign concern about the planet while slashing jobs and investment in renewables and ploughing money into dividends, share buybacks, and new fossil fuel projects.”

Imogen Dow, a campaigner at Friends of the Earth, said: “Buoyed by last year’s bumper profits – the biggest in Shell’s history – the company is going full steam ahead with plans to extract every last drop of oil and gas it can. The companies fuelling the climate and energy crises continue to cash in at our expense.

“Meanwhile, consumers remain dangerously exposed to future price shocks and volatile gas markets, which are increasingly threatened by global instability. It hardly needs saying that we must get off expensive and harmful oil and gas for good.”

Shell’s adjusted profits for the third quarter fell to $6.2bn from $9.5bn in the same period last year, broadly in line with the expectations of industry analysts following the decline in oil and gas market prices from their peak last year when Russia invaded Ukraine. The increase in global energy market prices triggered a cost of living crisis for households but handed record profits to oil and gas companies.

The TUC’s general secretary, Paul Nowak, said: “This sums up everything that is wrong with our broken energy market. Money that should have gone to cutting household bills has ended up in shareholder pockets. The Conservatives have allowed the likes of Shell to cash in at the expense of struggling families. The government must stop enabling this gross profiteering and impose a proper windfall tax.”

Global oil and gas market prices have tumbled since last year’s peak. The global oil price averaged $85.80 a barrel in the last quarter, down from about $100.80 in the same quarter of last year as Russia’s attack on Ukraine intensified. The US benchmark gas price fell to an average of $2.61 per million British thermal units in the third quarter, from $7.89 in the same months last year.

Shell’s stock rose 3.8% on Thursday and to a near-record high of £27.72 a share. It has soared in recent weeks amid concerns over the fallout from the Israel-Hamas conflict, which pushed the price of oil to more than $92 a barrel at one point. Oil prices have eased back in recent days due to concerns over the global economic outlook, which typically dictates demand for crude. Brent crude was trading at nearly $86 a barrel on Thursday.

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