Key findings

• Shell has lowered its IRR for Upstream and Integrated Gas to 15% and 11%, respectively. Hurdle rates for gas are now lower than EV Charging and Biofuels (12%) and barely higher than its Renewables segment (10%). We believe inertia is driving Shell’s decision to prioritise gas over transition fuels, not financial returns. 

• In contrast to other analysis, we see immaterial changes in oil and gas volumes for FY30. While Shell did not offer specific guidance on gas production or portfolio mix, their charts suggest gas could contribute 50% to its production in FY30, which is lower than the previous target of 55%.

• Shell has no clear path to achieving its net carbon intensity reduction targets, -20% by FY30 and -45% by FY35 (of which it has achieved 4% to date). Biofuel has become the last remaining bow in its quiver for shifting the carbon intensity of its fuel mix, and we expect Shell will have to change its targets ahead of the 2024 AGM.