With the oil crisis hitting hard on all oil companies, an effect of Paris agreement nations are shifting towards clean energy and an enormous amount of investments from the finance majors coming in renewable energy sector, oil giants like shell are morphing into natural gas, LNG business. It is not only shifting towards gas business but also to renewable energy to cope up with the change. The classic example is of Shell (the world’s second largest private oil company), after purchasing BG group; it has formed a separate division – New Energies, to invest in renewable and low-carbon power.
The recent statement by Ben van Beurden, CEO of Shell during his interview to Bloomberg is very interesting in this regard; he said: “We’re more a gas company than an oil company. If you have to place bets, which we have to, I’d rather place them there.” From the branding as a “petroleum company” shell is now poised to become a “big gas company”. The takeover of the Curtis Island, LNG plants gave Shell an access to gas fields from the U.S. to Kazakhstan. Now has a 20% share of the global LNG market. This move has left its competitor ExxonMobil way behind in terms of gas production capacity, it’s almost double than that of ExxonMobil today. The company’s website very clearly projects a number of “Shell Scenarios” that how it plans to step ahead in growing energy market while generating less CO2.
It is a strategic decision by Shell to get engaged in the gas business on such a vast scale. The governments across the world are moving in fast to shift towards renewable to stand by the commitments of restriction / slower climate change. And gas is widely accepted as a transition fuel or bridge fuel (as it is called) while shifting away from coal in controlling greenhouse gases emission. The gas power plants are relatively cheaper to build and operate as well as “switch on and off” is very easy as compared to those of coal-fired. Moreover, these plants are to remain as complimentary to popular renewable energy sources – the wind and solar power generators.
Oil companies have realized that natural gas can replace oil and coal to become a major electricity producer. Helping to shift towards lesser carbon-intensive energy processes and in turn aiding many developed nations to meet their climate change goals. Professor Paul Stephens at Chatham House think-tank has warned in his research published in May 2016 that, “International oil companies must change their business model or face an end within 10 years.”