‘Dangerous and irresponsible’ to cut oil production, says Shell chief Wael Sawan

Wael Sawan, the chief executive of supermajor Shell, has cautioned that cutting oil and gas production would prove to be “dangerous and irresponsible”.

Sawan told the BBC on Thursday that the world still “desperately needs oil and gas” as the transition to renewable energy is not happening fast enough to replace it.

“What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again,” he was quoted saying by the BBC.

Sawan warned that increased demand from China and a colder winter in Europe could push energy prices even higher.

His comments come at a time when the world is racing to reduce its dependence on fossil fuels, aiming to keep global warming to less than 1.5 degrees Celsius by 2050.

Sawan’s comment echoes a wider trend in the Middle East, where state-owned giants including Saudi Aramco and Abu Dhabi National Oil Company (Adnoc) have been asserting the role of oil and gas in the global energy mix, pumping billions of dollars on hydrocarbon expansion projects.

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Shell will spend about $13 billion annually on its upstream and integrated gas business through 2030 to maintain production at about 2.5 million or more barrels of oil equivalent per day.

At the recent capital markets day in New York, Sawan stressed the major remained “absolutely committed” to its upstream business.

This capital allocation — which equates to more than $100 billion over the remainder of the decade — aims to reverse Shell’s previous target, which had been to reduce oil and gas output by between 1% and 2% per year in that timeline, set under previous chief executive Ben Van Beurden.