Shell to Shift Focus to Hydrogen and Power Trading Business as a Part of its Smart Growth Plans

Royal Dutch Shell, a multinational petrochemical company, has announced its vision to seek opportunities in biofuel market along with exploring rapid growth options in establishing a Hydrogen economy. Shell is likely to unfold its strategy on February 11 and unlike its competitors, it is perceived to be focusing on placing itself as a promising intermediate between customers and various clean power producers.

Royal Dutch Shell, in October revealed that it would increase the investments on low carbon energy to 25 percent of the complete expenditure fixed till 2025. However, for the next decade, the company has planned to keep its oil and gas output stable for funding of its transition plans. With anticipated investment on low-carbon energy expected to rise to USD 5 billion i.e., by ten folds over the next decade, the company has implied a shift of its oil and gas team towards the new renewable alternatives.

In addition, the company is also heard betting on its growth prospects upon Hydrogen. Shell is aiming to center its initial investments in Europe where it is already developing a major Hydrogen hub in Germany. After the success over its initial investments, it is planning to expand its reach in the North American and Asian markets. Moreover, Shell is looking forward to strengthening its consumer base by indulging into a long-term power purchase agreement (PPA) for electricity supply to household and its various retail networks. The company is thus planning to add 10000 retail outlets by 2025 in addition to its existing 45000 retail outlets. Along with Shell, companies like Italy’s Eni, BP and Repsol is also eyeing to expand its reach in hydrogen and biofuel market and give way to new revenue options apart from oil.

The company is already a market leader in trading as it trades around 13 million barrels oil per day equivalent to around 13 percent of the global oil demand before the Covid-19 pandemic. The company is even the largest trader of Liquified Natural Gas (LNG) along with the trading of chemicals, biofuels and power credits. Under its mega expansion plans, it now glares to strengthen its foothold as a leader in the rapidly expanding low carbon market.

As per ChemAnalyst, “Shell’s plans to focus on new growth provoking businesses is a step to reduce its dependence upon fossil fuels by leveraging the recent shift in consumer interest and government norms. The company is expected to positively impact its financials with its aims at enlarging in divisions with new renewable power assets.”