Cost pressures prompt Shell to halt biofuel plant

Wednesday 10th July 2024 06:53 EDT

Shell has halted construction on one of Europe's largest biofuel plants to address technical issues and manage costs, part of a broader effort by its CEO to enhance financial returns.

The oil giant announced a temporary reduction in on-site activities at its Rotterdam complex in the Netherlands, where a facility was being built to produce approximately 820,000 tonnes of sustainable jet fuel and renewable diesel annually from waste. This decision aims to optimise project workflow and control expenses.

Under CEO Wael Sawan, who took the helm last year, Shell has scaled back various clean energy initiatives. This includes divesting from investments in renewable power and battery storage, focusing instead on bolstering profitability in its core oil and gas operations.

Shell plans substantial investments—between $10 billion and $15 billion—from last year through next year in developing low-carbon energy solutions. These efforts encompass e-mobility, low-carbon fuels, renewable power generation, hydrogen, and carbon capture and storage.

The Rotterdam project has faced challenges due to its design complexity and scope expansion, leading to engineering delays that have impacted site productivity. Huibert Vigeveno, Shell’s downstream, renewables, and energy solutions director, stated that pausing construction will allow for a reassessment of the project's commercial viability while affirming Shell's commitment to achieving net-zero emissions by 2050. Low-carbon fuels remain integral to this strategy.

Vigeveno emphasised Shell's approach to deploying shareholder capital prudently, aiming to deliver enhanced value while reducing emissions across its operations.

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