World needs new oil and gas to meet demand, says Shell

THE world is at risk of energy shortages unless more money is invested in drilling for oil and gas, Shell has warned.

The energy giant said global investment in low-carbon energy was only half what is needed, meaning alternative sources need to be secured.

The warning came as Shell watered down a key climate pledge to cut its own carbon intensity and pledged a sharp increase in production and sales of liquefied natural gas (LNG).

Separately, the International Energy Agency warned that the world was facing a “slight deficit” of oil this year because of surging US demand and continued production cuts from Opec+ countries. The oil price rose to a fourmonth high yesterday, breaching $85 for the first time since November.

Rishi Sunak this week announced plans to build new gas power stations in Britain, warning that the country risked blackouts during the transition to net zero without the investment.

Wael Sawan, Shell’s chief executive, said: “The world must achieve an orderly transition away from fossil fuels to low-carbon energy to achieve netzero emissions. Today, fossil fuels meet about 80pc of global energy demand, with an even greater reliance in many developing countries. We support a balanced energy transition, one that maintains secure and affordable energy supplies as the world moves to net zero.”

He said expanding LNG production was essential to the energy transition, with Shell planning to boost production from 28m tons to about 39m tons.

Shell’s decision to ramp up production of LNG, set out in the company’s new energy transition strategy, marks a step back from the green policies drawn up in its last strategy, which was published before the Ukraine conflict disrupted global energy markets. The company now plans to reduce the “net carbon intensity” of the energy it sells by 15pc-20pc by 2030.

Its previous target had been to reduce the measure by 20pc. It has also dropped a plan to reduce the net carbon intensity of its energy by 45pc by 2035 because of “uncertainty in the pace of change in the energy transition”, although it still intends to achieve a 100pc reduction by 2050.

Shell also revealed yesterday that Mr Sawan was paid a total of £7.9m in his first year in the job. This included a base salary of £1.4m, a bonus of £2.7m and a £2.6m long-term incentive payment.

Jonathan Noronha-gant, fossil fuels campaigner at Global Witness, said: “The Shell chief ’s pay packet is a bitter pill to swallow for the millions of workers living with the high costs of energy.”