The boss of energy giant Shell has outlined the need for "balanced" investment in both fossil fuels and renewables - warning that cutting production of fossil fuels too quickly would trigger similar price swings to those seen in 2022.
Addressing investors after the firm announced record profits for 2022, Wael Sawan, Shell's new chief executive, said the world would be “desperately in need” of fossil fuels for years to come.
He warned that although mild weather had helped to reduce demand this winter, the energy crisis was far from finished, adding: “This is going to be a journey of years and I would caution anyone who looks ahead and assumes that the worst is over.”
He added: “We need to be able to deliver secure and affordable energy that is increasingly lower carbon, to be able to transition in a way to achieve the net zero emissions energy system that we all we all aspire to.
“Having said that, I think if 2022 has shown us anything, it is the reality of under-investing in a system, and the implications of that, as we've seen volatile energy prices last year, mainly in the gas arena. You can see how tightly balanced that market overall is.
“Our philosophy has been a real pivot towards energy transition investments... But we will make sure that those investments go into the areas where we can see line of sight towards attractive returns to be able to reward our shareholders.”
He said a faster switch to renewables would require “significant change” from governments and demand from the company’s customers.
Labour 'misrepresenting the tax system'
Despite less than 5% of Shell's earning being in the UK, Labour Shadow Climate Secretary Ed Miliband used the Shell results to call for more windfall taxes on the North Sea, despite firms already being taxed at 75%.
Mr Miliband was asked by the BBC whether the oil and gas windfall tax, which has been introduced and then extended since May last year, should be extended again. He responded: "Yes. Prices are going to go up by another 40% in April - and at the same time, Shell making record profits, the windfalls of war, unexpected, unearned profits and a government that fails to levy a proper windfall tax, with massive loopholes for companies."
OEUK accused Labour of misrepresenting the tax system, saying “politicians in all parties know very well how global tax law works and we would call on them to avoid these misrepresentations”.
Sustainability director Mike Tholen said: “These calls for extra windfall taxes on profits made outside the UK make no sense and could never be implemented. The UK is subject to global tax agreements which say that it cannot tax profits made by companies outside of the UK.
“Multinationals like Shell and BP are not single companies but groups – with multiple subsidiaries. Subsidiaries based in other countries will pay taxes – but in those countries. The UK cannot then impose a second tax just because the group has its headquarters in the UK. If we did, they would all leave.
“We already have a 75% windfall tax on profits made in the UK. It would also be invidious for the UK to tax profits made in other countries too. The taxes on those revenues belong to the countries where they were generated. It would be wrong for another country’s revenues to be effectively seized by the UK.
“Our leading politicians in all parties know very well how global tax law works and we would call on them to avoid these misrepresentations.”
Gas project kicks off
Meanwhile, production at the Pierce gas expansion project in the UK North Sea is now underway,
Following the publication of the oil giant’s 2022 results, group chief financial officer Sinead Gorman confirmed that the project is “operational”.
“We are watching closely as that ramps up,” she told an analyst call on Thursday morning.
Shell previously said it had expected first gas production from Pierce, about 165 miles east of Aberdeen, in Q2 of 2022 – that date was subsequently kicked back until autumn, Energy Voice reports.