Royal Dutch Shell plc updated investors on its downstream growth ambitions, underlining the important role they will play in delivering Shell’s world-class investment case.
“Our unique Downstream business is fundamental to delivering a world-class investment case,” said Chief Executive Officer Ben van Beurden. “Its unparalleled breadth, depth and the strength of our brand make our Downstream business highly competitive, helping to generate strong free cash flows and returns, while making Shell more resilient over the coming decades.”
John Abbott, Downstream Director, explained how the business will help Shell thrive through the energy transition. “We have a customer-centric mindset and the most integrated Downstream business in the world. We have a strong track record of delivery, a diversified portfolio and ambitious growth plans – underpinned by operational excellence – that all ensure our business remains resilient today and for the future,” he said.
“This business will continue to create value for shareholders and customers. We believe our Marketing business is the most profitable in the industry, and Chemicals had a record year in 2017. Meanwhile, our refining and trading teams make the most of our scale, global presence and customer reach. We have a unique strength in our brand and a fully integrated business model that our competitors find difficult to match,” Abbott said.
“Downstream is helping Shell to thrive during the global shift to a lower-carbon energy system. As the energy system evolves, our marketing businesses will provide agile platforms for meeting the changing needs of our customers. We are making products from today’s technologies as good as they can be, with better fuels and lubricants. We are also helping to deliver tomorrow’s products, services and technologies. From battery-electric vehicle charging to next-generation biofuels; LNG for transport to hydrogen; and smartphone apps that enable more efficient driving. We are also working to reduce emissions from our own operations.”
Shell reiterated its expectation of US$6 – 7 billion annual organic free cash flow from Downstream by 2020, at US$60 per barrel (real terms 2016) and mid-cycle Downstream conditions, with US$9 – 12 billion expected by 2025. The company plans to invest US$7-9 billion a year across Downstream, and to deliver a return on average capital employed (ROACE) above 15%.
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