Shell committed to expanding its chemical business on Thursday, setting targets for the division as it moves the company towards net carbon neutrality.
In a strategy update, the company’s CEO Ben van Beurden laid out targets to increase cash generation from chemicals by $1-2 billion per year and reduce exposure to commodity chemicals by around 70% by 2030. He also reiterated a target to process 1 million tonnes per year of plastic waste for recycling by 2025.
Van Beurden stated that the objective of the company – announced in the third quarter of 2020 – to reduce its portfolio of 13 oil refining sites globally to six energy and chemical parks by 2030 is well underway through the divestment and closure of some assets.
The company said previously the six sites will be located mainly around the US Gulf Coast, northwest Europe and Singapore.
Shell sees chemicals as a growth opportunity because they produce products that will help drive the transition to energy and transport with lower carbon intensity. This is attributable to Shell’s own goal of becoming a net zero carbon emission energy company by 2050 or earlier.
On chemicals, the CEO said: “We see chemical demand continuing to grow, outpacing GDP, because chemicals are found in all aspects of modern life and are the building blocks of the future energy system. So we will continue to grow our chemicals business with a focus on intermediates and performance chemicals.”
Van Beurden said these are the areas where Shell has competitive advantages in technology, scale and market access. He believes the move to sustainable and performance chemicals will bring Shell closer to the end customer.
“It will help us evolve our portfolio from commodity chemicals to products that are priced on the value they bring to the end consumer. In this way we start to delink our business results from the commodity cycle, reducing our exposure by around 70% by 2030.”
“Between our opportunities to increase margins and the options we have to invest for growth we will increase chemicals cash generation by $1-2 billion per year by 2030,” he added.