Investors Express Concern Over Expansion Plans in Natural Gas at Shell's Annual Meeting
In a dynamic energy landscape, Shell is pushing ahead with its LNG expansion plans, as evidenced by the commencement of LNG exports from the LNG Canada facility in 2025. The facility, with a capacity of 14 million tonnes per annum, marks Shell's commitment to growing its LNG portfolio [1][3].
However, this expansion is not without controversy. Investors, including the Greater Manchester Pension Fund and other funds, have raised concerns about the long-term alignment of these investments with climate commitments and net-zero ambitions [2]. The resolution filed by UK LGPS investors and co-filed by the ACCR questions Shell's assumptions about LNG demand and its potential exposure to losses if prices were to drop [4].
Sandra Stewart, chief executive of the Greater Manchester Pension Fund, has expressed her concerns about Shell's long-term strategy and its impact on climate commitments [2]. Similarly, Vaishnavi Ravishankar, head of Stewardship at Brunel Pension Partnership, has voiced her concern about the disconnect between Shell's LNG expansion and its Paris-alignment ambition [5].
Investors are particularly interested in balancing LNG expansion with climate commitments. While LNG is seen as a transition fuel aiding in decarbonization—especially in sectors like shipping—there is scrutiny regarding Shell’s capital expenditure decisions and whether they align with net-zero targets [2][4]. The LNG bunkering market is expected to grow substantially globally through 2032, driven by clean fuel mandates and infrastructure expansion in key regions [2][4].
Shell's CEO, Wael Sawan, has expressed his conviction in supporting LNG growth and decarbonization through carbon capture and sequestration and liquid synthetic gas development [6]. However, some investors worry that heavy investments in LNG infrastructure risk locking in fossil fuel dependency, potentially conflicting with broader climate goals and pressure to shift faster towards renewables and low-carbon technologies [3].
In response to investor concerns, Shell's chair, Sir Andrew Mackenzie, has urged shareholders not to back the LNG resolution, warning that the world will burn more coal and renewables will be deployed more slowly without LNG [7]. The company, under UK listing rules, is required to explain how it will address shareholder concerns about its LNG expansion strategy [8].
Notably, more than 20% of Shell's shareholders have backed the resolution questioning the company's planned expansion of LNG production [9]. Milieudefensie, a Dutch campaign group, has also challenged Shell on rising emissions and its duty to cut emissions [10].
Rumours of potential consolidation in the oil and gas sector have surfaced, with Shell and BP as possible candidates [11]. When asked directly about these rumours, chair Mackenzie neither confirmed nor denied, instead focusing on returning dividends to shareholders [12].
Shell plans to grow LNG sales by 4-5% annually until 2030 and aims to grow top-line production in its integrated gas business by 1% annually [3]. The company predicts that global demand for LNG will rise by 60% through to 2040 and has made LNG production a key part of its expansion strategy [1].
In the midst of these debates, Shell faces pressure from various quarters to reconsider its LNG expansion strategies in light of climate commitments and the transition towards renewable energy. The company's strategy appears to focus on LNG as a transitional fuel while managing costs and shareholder returns amid a dynamic regulatory and market environment for decarbonization [1][2][3][4].
Sports enthusiasts might find it interesting to note that while Shell is expanding its LNG portfolio, some investors are concerned about the alignments of these investments with climate commitments and net-zero ambitions [2][4]. This controversy raises questions about Shell’s strategy, particularly in regards to its LNG growth, and its impact on the transition towards renewable energy [1].
