Photo caption: Shell CEO Wael Sawan
By Emeka Ugwuanyi
Global oil major Shell PLC achieved an impressive record in the financial year ended December 31, 2023, raking in $54 billion income, which was the second-highest in the company’s history.
In his remarks, Shell PLC’s Chief Executive Officer, Wael Sawan, said the feat was achieved through discipline in investments by focusing on where the company can have maximum impact in generating value and lowering emissions.
Buttressing the performance, Sawan had at Capital Markets Day in June, showed how the managment planned to profitably transform Shell through the strength of its portfolio, technological and trading capabilities, and its deep customer relationships. We will be guided by the financial and climate targets and ambitions we have set, he added at the Capital Markets Day.
The Shell Chief said: “Cash flow from operations for 2023 of around $54 billion was the second-highest in our history, income was around $20 billion and Adjusted Earnings* around $28 billion. Our performance enabled us to return $23 billion to shareholders* through $15 billion in share buybacks and $8 billion in dividends. This is 42%* of cash flow from operations (CFFO) and around the upper end of our 30-40% of CFFO through the cycle target range.
“We continue to be disciplined in our investments, focusing on where we can have the maximum impact in generating value or lowering emissions. In 2023, cash capital expenditure* of $24 billion was at the lower end of our $23-27 billion range.
“Between 2023 and 2025, we plan to invest around $40 billion in oil and gas. An example of more value with less emissions is the Vito platform (Shell interest 63.1%) in the Gulf of Mexico, which started production in 2023. Vito cost less to build because its topsides and hull are a third of the size of its original design and is expected to produce around 80% less emissions over its operating life. We are using the same concept for two more platforms: Whale (Shell interest 60%) and Sparta (Shell interest 51%).”
He also stated that the 2023 financial year was another strong year for Shell. “One highlight for me was QGC in Australia, which had its highest ever liquefied natural gas (LNG) production in the fourth quarter and delivered its 1,000th LNG cargo. Another was the strong operational performance in our deep-water portfolio. Completing the acquisition of Nature Energy, which expanded the range of low-carbon energy we can offer, also stood out.”
“From July 1, 2023, our smaller Executive Committee took effect with two clear business directorates, and a single finance, strategy, mergers and acquisitions and sustainability directorate. This simplification has already enabled more streamlined planning and improved decision-making. We are also in the process of moving to our new Safety, Environment & Asset Management Standards (SEAM), which will reduce the number of key requirements to around 500 from the current 1,800 and enable our people to focus on implementing our strategy more efficiently.
“By the end of 2023, we had achieved around $1 billion of structural cost reductions*, positioning us well to save the $2-3 billion we said we would by the end of 2025.”
Sawan lamented the conflicts between Russia and Ukraine and in the Middle East region resulting in loss of lives and altering the energy system. He called for an end to these conflicts and loss of lives. He also restated Shell’s commitment to energy transition and energy security.
He said: “In 2023, the Russia-Ukraine war continued and renewed conflict in the Middle East raised the spectre of another regional war. Too many lives have been destroyed and I hope for an end to these human tragedies soon. Geopolitical volatility and the fragmentation of our world are growing at a time when we should be working together to fight the global challenge of climate change.
“A balanced energy transition, which Shell supports, is one that maintains secure and affordable energy supplies, while the world builds the clean energy system of the future. Billions of people depend on energy and hundreds of millions still hope to have access to it. Energy is vital for lives everywhere.”
