Investors Express Reservationsabout LNG Expansion Plans during Shell AGM Meeting
In a notable development, Nick Mazan, the UK Lead for the ACCR, has stated that a significant number of Shell shareholders have expressed concern over the company's LNG strategy, urging for better disclosure.
Shell, a global energy giant, is actively progressing its LNG production expansion, aligning with its strategy to grow LNG sales by 4-5% annually through 2030. Key projects include the start-up of the 14 mtpa LNG Canada facility, where Shell holds a 40% share, with the first cargo expected on June 30, 2025. The company is also involved in the QatarEnergy LNG NFE expansion project, owning 25%, planned to start up in 2026. Furthermore, Shell is advancing investment decisions on FLNG projects in Argentina, alongside partners like YPF and Eni, with final investment decisions expected in early 2026.
Shell emphasises competitive supply costs to Asian markets and lower carbon intensity LNG, positioning these expansions as resilient through the energy transition.
Regarding investor concerns and the energy transition, Shell has been making strides in structural cost reductions, achieving $0.8 billion year-to-date and nearly $3.9 billion since 2022, with a target of $5–7 billion by 2028. The company maintains capital expenditure guidance of $20–22 billion for 2025, balancing growth investments and shareholder distributions.
However, at Shell's AGM, a significant number of major institutional investors posed critical questions about the company's LNG strategy. Sir Andrew Mackenzie, Shell's chair, urged shareholders not to back a resolution questioning the expansion of LNG production, warning that in the absence of LNG, the world would burn more coal and renewables would be deployed more slowly.
The resolution, which questions the assumptions made by Shell about LNG demand and potential losses if prices were to drop, has garnered the support of more than 20% of Shell's shareholders. The resolution has brought attention to overoptimistic LNG demand forecasts across the sector, according to Sandra Stewart.
Some shareholders, like Doug McMurdo and Vaishnavi Ravishankar, have expressed concern about the disconnect between Shell's planned LNG expansion and its Paris-alignment ambition. Milieudefensie, a Dutch campaign group, has threatened to take Shell to court again over its alleged failure to decarbonise, urging the courts to impose a ban against new oil and gas production.
Despite these concerns, Wael Sawan, Shell's CEO, expressed his conviction in being able to support the growth of LNG and decarbonise it over time through carbon capture and sequestration and liquid synthetic gas development.
The International Energy Agency predicts that global LNG demand will peak by 2030, due to increased availability of renewable energy sources. This prediction has added to the debate surrounding Shell's LNG expansion strategy.
In response to these concerns, Shell's leadership has emphasised the need to balance the expansion of LNG demand in Asia and globally, while managing transition risks. This approach reflects a pragmatic balance between growth and managing transition risks.
There is ongoing speculation about potential consolidation in the oil and gas sector, with Shell and its competitor BP being mentioned. However, when asked directly about these rumours, chair Mackenzie neither confirmed nor denied, referring instead to earlier statements prioritizing returning dividends to shareholders.
In summary, Shell is advancing its LNG production capacity with a global, diversified portfolio of projects while addressing investor concerns through cost discipline, clear capital allocation, and emphasising LNG’s role in an evolving lower-carbon energy mix. This approach reflects a pragmatic balance between expanding LNG demand in Asia and globally and managing transition risks.
The energy giant, Shell, is expanding its LNG production while addressing investor concerns, particularly in Finance, by focusing on structural cost reductions and clear capital allocation. The company's strategy, however, has sparked debate within the Industry, as some shareholders question its alignment with the Paris-ambition for decarbonisation. Despite these concerns, Shell continues to progress its LNG expansion, positioning it as a crucial part of its Lower Carbon Energy Mix business strategy.