Shell is gearing up to release more details about the financial performance of its cleaner energy and power business, although management cautioned this remains in growth-mode and investors will need to judge it differently to the company’s traditional oil & gas and refining units.
The renewable & energy solutions (RES) segment, formerly known as new energies, currently reports under the integrated gas unit, which has clouded in-depth assessments of Shell’s low-carbon operations.
Shell’s fourth-quarter 2021 results released on 3 February were the last in which the RES business reported in that way.
The integrated gas unit reported Q4 adjusted earnings of $4.05bn, up from $1.68bn in the same period a year earlier, buoyed by natural gas prices that have soared as economies recover from the pandemic.
Under plans announced last year, beginning at its first-quarter 2022 results due in May, Shell will expand its disclosure unit to give more insight into its green power business, carbon capture and storage activities and hydrogen activities.
Shell’s current reporting units are integrated gas, upstream, oil products, chemicals and corporate.
From the first quarter 2022 they will be renewables & energy solutions, marketing, chemicals & products, integrated gas, upstream and corporate.
Chief financial officer Jessica Uhl said during a call with journalists: “We recognise people want to have more insight.
“Investors need to have more insight in terms of how that business is performing.”
She added: “But it's important to keep in mind that we're really in the growth phase of this business.
“So, we're going to need to consider this and judge this on different characteristics than you would judge our legacy business … that we've been running for decades.”
Uhl said the nearer-term focus of the RES business unit will be on operational and capital investments, as well as building relationships with customers.
She said Shell was creating integrated power business models in different markets “that we think will be the future of the power business and will ultimately generate good returns”.
“But that business needs to be built from the ground today,” she said.
Renewables leadership switch
Meanwhile, Shell chief executive Ben van Beurden addressed the recent departure of Elisabeth Brinton as head of the Renewables & Energy Solutions unit after only two years in charge.
Brinton said she would be leaving the company for new role, to be replaced by Thomas Brostrom.
Van Beurden said she had done a “great job”.
“That's why I appointed her into the role that she led for the last two years, and I think she has done very well,” he said. “I'm very grateful for the contribution that she has given.
“She felt it was time for a change. She moved back to the United States, has taken up a role there that I think is another matter for her to announce the details of.
We have parted on really very good terms.
“But we have parted on really very good terms and I'm very grateful for what she has done. I wish her well and that's all there is to it.”
Brostrom will take up a new post of EVP of renewable generation, with another current Shell executive, Steve Hill, leading the energy marketing operation, including power.
They will report to Wael Sawan, Integrated Gas and Renewables & Energy Solutions director.
Brostrom, the former North America offshore wind chief at global green power giant Orsted, joined Shell last year as senior vice president, global renewable solutions.
Van Beurden added: “With departure of Elisabeth we have actually strengthened the leadership of our total power business.
“We have a very strong person in Tom who is going to be focusing on generation. Steve Hill, who is very well-known in energy circles … [will be] running on energy marketing, including gas and power.
“We have made a lot of progress, so I have a lot of confidence in our strategy going forward.”
Shell's renewables business already spans offshore wind, including floating, PV and storage.
The oil supermajor has this year already enlarged its ambitions through the win of a potential 5GW of floating wind acreage off Scotland in conjunction with Iberdrola in the recent ScotWind leasing round.
The expansion comes amid growing societal and investor pressure on oil & gas majors to combat climate change.
Shell last year faced pressure from New York-based activist hedge fund Third Point for the company to be split into two, one focused on “legacy” upstream, refining and chemicals operations, and another on liquefied natural gas, renewables and marketing.
