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What is the future of Royal Dutch Shell?

With the latest developments in the world (Paris, Nice, Munich), I’m think more and more about the future and how it will be for my children. Besides terrorism, global warming is a big concern of mine. Therefore, I’m looking how to invest in companies that have sustainability high on their agenda.

As you can see in my Vrijheid Fonds, I have invested approx. 11% in Royal Dutch Shell (RDS). So it is a substantial part of my portfolio.

Today I take a look at what Royal Dutch Shell is doing on sustainability.

Royal Dutch Shell
RDS is a global group of energy and petrochemical companies with an average of 93,000 employees in more than 70 countries. RDS uses advanced technologies and takes an innovative approach to help build a sustainable energy future. This you can read on the website. So RDS is much more than just an oil-major. In a article on Bloomberg.com Ben van Beurden, Shell’s chief executive officer, said: “We are more a gas company than an oil company”.

The $54 billion takeover of BG Group earlier this year, helped Shell to reach the top as a gas company. At this moment RDS has around 20 percent of the global LNG market. And they have double the production capacity of its closets competitor, ExxonMobil.

This is part of the strategy RDS had already written down in the seventies. It is way ahead of their rivals. The acquisition of BG Group plays a crucial role in the future of Shell.

Sustainability
Sustainability at Shell touches on all areas of their operations. They aim to deliver the energy needed for a growing population in a responsible way – respecting people, their safety and the environment. RDS understands that sustainability is essential to the longevity of their business and their role as a member of society. RDS is helping to shape a more sustainable energy future.

We all know that the world needs to change from fossil fuels (Oil and coal) to a renewable energy. RDS believes that natural gas helps in this transition. Natural gas is the cleanest-burning hydrocarbon, odorless, colorless and non-toxic. It is abundant and versatile, helping to meet growing demand for energy globally. If consumption remained at present levels, the International Energy Agency (IEA) estimates there are enough recoverable resources to last around 230 years.

Furthermore gas installations are greener than coal, they are cheaper in construction and easy to put on and off so that they are complementary with solar and wind energy. (RDS has a very informative website on sustainability).

RDS also has a Scenarios Team. In 2013 this team published a report. The major question raised by this team is: how could the world’s energy system evolve to meet future demand, while enabling a better quality of life and healthy planet? This report showed that economic growth coupled with near net-zero emissions is a challenging but achievable vision.

Jeremy Bentham, Head of Shell Scenarios, “We’ve taken the most optimistic features of our 2013 scenarios. We’ve then combined them with individually plausible further shifts in policy, technology deployment, circumstances, and events that might move the world onto a new, even lower-emission trajectory, resulting in net-zero emissions on a timescale consistent with global aspirations.”

Shell continues to develop its scenarios work to better understand the practical challenges ahead.

Innovation
Energy is vital to our daily lives. Over the coming decades, more people will gain access to energy and enjoy higher standards of living. At the same time, climate change remains a serious concern. RDS uses human ingenuity, innovation and technology to unlock more, cleaner energy for the years ahead.

For instance, RDS is working on a market for vehicles that run on natural gas, particularly ships and trucks because these are expected not run on electricity. According to Ben van Beurden, natural gas is therefore no transition commodity but an interesting part of a good energy mix

One other way RDS is working on a better and cleaner environment is through the Shell Eco-marathon. This is a unique competition that challenges students around the world to design, build and drive the most energy-efficient car. With three annual events in Asia, Americas and Europe, student teams take to the track to see who goes further on the least amount of fuel.

At this moment, investments in renewable energy are twice as high as investments in fossil fuels. But the difference in cost is expected to reduce rapidly the coming years. And luckily, the technology to store energy in batteries is growing rapidly. So the future for renewable energy looks bright 😉

RDS published a new report in which it explains how Shell is investing in low-carbon energy, and creating a strategy to succeed through changing times.

Future
RDS has a tradition to recognize trends before others do. It also recognized more than others the need to reduce CO2 emissions and invest in green energy. And the future of RDS (and every other oil-major) is, in my humble opinion, in renewable energy. So this Dutch-English company is on the right. As a Dutch citizen I’m proud at what this Dutch company is doing on sustainability.

I’m thinking about taking sustainability as part of my investment decisions. Do you have ideas how to do this? And what are your concerns about the future? And how do you act on them, or take into account in your investment decisions?

I like to hear from you.

Cheers,

Pollie

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7 thoughts on “What is the future of Royal Dutch Shell?

  1. Dividends Are Coming

    It will be interesting to see how the various disruptive evolutions in the energy and transport markets play out. I’ve been sitting on a draft for months with several of my thoughts about the challenges facing the oil & gas majors but still haven’t found the time to finish my analysis and write the article. In the meantime, I’ve decided to no longer reinvest dividends in energy stocks.

  2. Dividend for Starters

    As a fellow Dutchy I’m also proud of this company.
    As a matter of fact, I’m considering to start a position at the moment.

    However, I do think your 11% stake is a bit ambitious. As we know, oil and gas companies could be very volatile. I would only feel comfortable if my position would not exceed 5% of the total portfolio value.

    It seems you bought it a long time ago, so you still have a very nice profit.
    Thanks for sharing!

    DfS

    1. Pursuit 2 Freedom

      Hej Dfs,

      What do You think of the current rds privé? It’s still well below the 2014 high, but It’s also 25% above the 2016 low.

      With the increased privé the question raises if This privé is right for a new position.

      Just curious about your Idea as a fellow Dutch investor!

  3. John

    Interesting that I caught this article from someone in the Netherlands!

    As an engineer in the oil industry in Houston, Texas USA I will say that most of the majors don’t do much in terms of sustainability. I guarantee you the smaller companies do absolutely nothing. It’s largely a public relations activity in my view.

    That being said, I believe oil companies will be the ones who are in best position to transition from oil and gas to more sustainable energy sources. When the price of oil gets high enough, people will look to alternative energy and the oil companies must transition. The question is when.

    1. admin Post author

      Hello John,
      Thanks for stopping by and taking the time to write a comment.
      I agree that most companies say really pretty things. But reality it is something else 😟

      I hope that the oil major take their responsibilities and start acting.
      cheers,

      Pollie

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