ROYAL Dutch Shell boss Ben van Beurden has mounted a vigorous defence of the production of oil and gas in the North Sea insisting calls to ban it on environmental grounds are misguided.
Speaking after the Anglo-Dutch giant posted a dramatic increase in profits, Mr van Beurden said: “As long as the UK still needs oil and gas in its consumption for its society … it’s better to produce it in its own back yard for the climate, for the balance of payments.
“To just import oil and gas, which would be the alternative, from around the world, would obviously not serve the climate at all.”
He added: “ I know that it’s quite often symbolically not what people would like to hear, but symbolism won’t help us with climate change.”
Mr van Beurden made the comments in response to a question about the possibility of curbs being placed on exploration and development activity in the North Sea.
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Campaigners insist oil and gas exploration and field development activity will be incompatible with the UK’s commitment to cut emissions to zero net of amounts absorbed by 2050.
They stepped up calls for action following revelations that Siccar Point Energy has applied for regulatory clearance to develop the giant Cambo find West of Shetland with Shell.
Mr van Beurden’s remarks yesterday suggest the company would be unlikely to drop plans for Cambo on the grounds that it should not produce the oil concerned.
It remains to be seen whether the company will sanction the hefty investment that would be required to develop Cambo.
In March Last year Siccar Point and Shell said they had decided to defer making a decision about whether to invest in developing Cambo because of the huge economic disruption caused by the coronavirus crisis.
Market conditions are now much brighter.
After falling to an 18-year-low of less than $20 per barrel in April last year, the price of Brent crude has risen to above-pre pandemic levels amid expectations the rollout of coronavirus vaccines will fuel a strong economic recovery.
Brent crude sold for around $75/bbl yesterday afternoon.
Shell made $5.5bn (£4bn) profit in the second quarter, compared with $0.6bn in the same period last year.
Mr van Beurden noted that Shell has seen a recovery in demand in most areas of its operations, which include refining and chemicals production and petrol retailing. However, demand for aviation fuel has yet to recover.
Shell announced plans for a big increase in payouts to shareholders which Mr van Beurden said reflected confidence that the group is well placed to achieve strong growth.
Directors have developed a strategy that they believe will help Shell to play a supportive and profitable role in the transition to a lower carbon energy system.
Mr van Beurden noted yesterday that this will involve the company investing heavily in sectors such as hydrogen production and carbon capture and storage (CCS), and working with industries to help reduce emissions.
He highlighted the group’s involvement in the Acorn CCS project in Scotland. Shell became a partner in Acorn in the second quarter.
It bid for offshore windfarm acreage with ScottishPower in the ScotWind licensing round, which closed to applications this month.
Mr van Beurden has said Shell expects to remain in the oil and gas business for years and sees the North Sea as a core area. He thinks gas will be an important transition fuel that can be used to reduce reliance on coal while renewables capacity is developed. Oil will be needed in energy-intensive industries that are seen as being hard to decarbonise, such as aviation.
The money the company makes in oil and gas can be used to fund investment in other areas and payouts to investors.
In February Mr van Beurden said Shell had “running room” in the North Sea. and saw great potential in the West of Shetland area. Shell has retrenched in the North Sea in recent years but invested heavily in developing big fields West of Shetland, such as Clair Ridge.
In January the company announced plans to shed around 330 jobs in its UK North Sea business. It employed around 1,300 people in the business then.
Shell increased its second quarter dividend to 24 cents from 17.35 cents in the first quarter.
Mr van Beurden said: “We are also launching $2billion of share buybacks which is targeted to be completed by the end of this year.”
In April last year Shell cut its dividend for the first time since the Second World War to save cash. It cut the first quarter payment for 2020, to 16 cents per share from 47 cents.
Shell started increasing dividends again from the third quarter of 2020.
Royal Dutch Shell A Shares closed up 53p at 1458.6p yesterday.