Son of Rainmaker: An Open Letter to Wael Sawan, Shell CEO - Africa’s premier report on the oil, gas and energy landscape.

Son of Rainmaker: An Open Letter to Wael Sawan, Shell CEO

By Gerard Kreeft

 Prelude: A (possible) scenario of succession at the Shell top

 In the summer of 2021, the Shell Board decided that the then CEO Ben van Beurden had to go. The Shell share was on a downward spiral and the transition message proved stale. What to do? The Board decided that Wael Sawan, then Head of Upstream, would become the Prince in Waiting. In Oct 2021, he was appointed Head of Integrated Gas, replacing Maarten Wetselaar who, at the time, was Head of Integrated Gas and seen as the logical heir apparent of Ben van Beurden. Wetselaar resigned and Sawan became Head of Integrated Gas and then CEO.

Dear Mr. Sawan:

I would like to extend my congratulations on your appointment as Shell’s new CEO. As a fellow Canadian its always good to see a fellow countryman endowed with such a prestigious position. Yet with such a position comes much responsibility, in particular shaping the vision for Shell for much of this century; preparing Shell for a brave new energy world. There are some tough choices to make. At best, radical re-alignments and at worst, simply dissolving the company and giving shareholders an alternative  option on how to invest their savings.

Shell’s Current Dilemma

Shell has just announced its highest results of the last 115 years: $40Billion in annual adjusted profit for 2022. Yet investor interest has been muted at best. Shell’s share price has only shown a downward spiral of 17% in the 2018-2022 period. The Dow Jones Industrial Index in the same period: January 2018-December 2022, rose 31%: increasing from 25,295 to 33,147.


Table 1: Stock market prices of majors 2018-2022(NYSE)


YearRepsol      BP      ShellENITOTAL



Note: Values based on January 2018 and December 2022


Results for all of the majors was as follows:

Repsol down 5%

BP down 19%

Shell down 17%

Eni down 17%

TOTALEnergies up 7%

Chevron up 39%

ExxonMobil up 26%

Equinor up 57%.

 Also, Shell’s dividend yield is uninspiring: 3.47% as of February 2023. This is much in line with Chevron’s dividend yield of 3.56%, BP’s 3.89% and ExxonMobil’s dividend yield of 3.25%. Yet their dividend yields pale compared to the Green Energy Alliance:

Iberdrola  4.19%

Enel  7.46%

Engie  6.49%

Equinor  8.56%

Ørsted only has a dividend yield of 2.3% but its share price in December 2022 was $93; five years earlier in 10 June 2016 it was $37.


Finally, there is the matter of Shell’s Powering Progress, a three-step plan designed to transform and fully prepare the company for the energy transition:

  1. “Growth pillar includes our service stations, fuels for business customers, power, hydrogen, biofuels, charging for electric vehicles, nature-based solutions, and carbon capture and storage. It focuses on working with our customers to accelerate the transition to net-zero emissions.”
  2. “Transition pillar comprises our Integrated Gas, and our Chemicals and Products businesses, and produces sustainable cash flow.”
  3. “Upstream pillar delivers the cash and returns needed to fund our shareholder distributions and the transformation of our company, by providing vital supplies of oil and natural gas.”

Of particular importance is the third pillar which in Shell’s vision will provide the cash flow to fund its transition and growth. Is this really so? The Shell share price and dividend yield demonstrate that there is little trust in this vision. Leaning and depending on its upstream portfolio to lead the company to a bright new green future is perhaps central to Shell’s dilemma. The share price and dividend yield simply demonstrate that upstream oil and gas is viewed as a sunset industry, perhaps a distant memory of the integrated oil companies of 50 years ago. This pillar is not one to build a green future on.

Shell’s vision is also a testimony demonstrating how little the Green Alliance—Enel, Engie, Iberdrola, and Ørsted–is understood and viewed. What has set these companies apart is that they have created a huge competitive advantage which will be hard to challenge for newcomers. They have moved well beyond simply dabbling in green energy. These companies have become specialists and now moving on to the next level: creating a digital platform on which value does not reside in owning resources but rather in managing data-driven ecosystems. The Green Alliance has essentially borrowed a chapter from Uber, which does not own taxis, or, which does not own hotels. They create a digital platform on which value does not reside in owning resources but rather in managing data-driven ecosystems.  Some members of the Green Alliance have established new goals, such as CO2 neutrality by 2040 instead of 2050 to which Shell is pledged.

 Enel: committed to achieving CO2 neutrality by 2040 instead of 2050, achieving 75% of electricity from renewables and 80% digitalization of its customers on the grid by 2025. and having an installed generating capacity of 75GW by 2050.

Engie: pledged to reduce to CO2 neutrality by 2045, 45% of investments is focused on renewables and by 2030 will have 80GW of installed generating capacity.

Iberdrola: in the period 2023-2025 the company will invest $50 billion and achieve net zero for Scope 1, 2 and 3 before 2040. By 2030 the company will have installed capacity of 100GW, valued at $70 billion.

Note: Essentially, scopes 1 and 2 are those emissions that are owned or controlled by a company, whereas scope 3 emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it.

 Ørsted: the Danish wind energy pioneer, continues to set new records. Ørsted share price in December 2022 was $93; five years earlier in 10 June 2016 it was $37. By 2030 the company’s goal is to have an installed capacity of 50GW. Ørsted is also involved with the building of two energy islands– Bornholm and North Sea– which will deliver 10GW of power.

How will shareholders react to these companies in 2023? To date there is good news and bad news for green energy companies.

Table 2: Stock market prices of new energy companies 2018-2022


 Enel, the Italian power company has seen its share price remain flat. Engie, the large French energy giant has seen its share price decrease by 12.5%. Iberdrola, the Spanish power company has had an increase of 71% and Ørsted, the Danish power company, has seen its stock soar by 90%.

Annual capital expenditures in the near term, according to Shell, could be in the range of $23-$27Billion. The breakdown of Shell’s capex is not given but all indications are that as in the past the lion’s share will go to its upstream and integrated gas and chemicals. Renewables share is unknown.

 Re-inventing Shell

Shell is rebranding itself:

Integrated Gas+ upstream becomes Integrated Gas and Upstream Directorate;

Downstream + Renewables and Energy Solutions becomes Downstream & Renewables Directorate.

Shell indicated that it will reduce its upstream division to nine core hubs—Permian, the Gulf of Mexico, United Kingdom, Kazakhstan, Nigeria, Oman, Malaysia, Brunei and Brazil– and it will do no frontier exploration after 2025. If the rush to the global exploration exit continues to pick up speed, Shell may well have to reconsider its(new)upstream strategy, perhaps going so far as to spin off the upstream division as a separate entity or do a joint venture with other partners.

Shell’s integrated gas division could prove to be its star asset. For example, Wood Mackenzie’s AET-2 Scenario (Accelerated Energy Transition Scenario) predicts that in the following decades, market power will shift from OPEC to the giant gas producers, such as the USA, Russia, and Qatar.

According to AET-2, the “Era of carbon-neutral gas is born. AET-2 would require $300Billion to support Liquified Natural Gas growth globally and $700 billion to support dry gas development in North America.”  Given that Shell is the global leader of LNG (liquid natural gas) this is certainly a sweet sound for Shell’s LNG business.

Downstream could also prove to be a key energy transition asset. Shell’s REFHYNE Project, the Rhineland Refinery in Germany, could well become the precedent that the company needs to ensure it becomes the leading supplier of green hydrogen, where hydrogen production is powered by renewable energy for industrial and transport customers. Could the REFHYNE Project be duplicated many times over to ensure that green technology becomes a key ingredient in the energy transition?

Pay attention to Shell’s Pernis refinery in the Netherlands. One of the largest in Europe, Pernis refinery has a 400,000 b/d capacity and a complexity enabling the processing of many different crude types. The site is already deeply integrated with chemicals production and is being transformed into an integrated energy and chemicals park that will deliver low-carbon products.

A key remaining issue is how Shell can reallocate its resources—both financial and technical—and maintain an image of being in control of its energy transition scenarios. Upstream with its huge exploration and development costs is perhaps Shell’s largest impediment to becoming a greener company. Do not be surprised to see Shell’s upstream division find a new home, thus freeing up funding needed for Shell’s energy transition. Shell’s Management must very quickly devise a road map demonstrating how by 2030  integrated gas and downstream and renewables divisions will receive the lion’s share of Shell’s capex.

TOTALEnergies has recently announced that by 2050 the company will be on track to have 50 per cent of its energy mix in renewables + 25% in “new molecules” (green fuels). By 2030, Equinor is pledged to having more than 50% of its capex dedicated to renewables. Will Shell follow?

A final comment: Shell’s inability to convince shareholders of its added value is not so much a climate issue. It is rather the inability of the board to proclaim a clear message—be that wanting to be an oil company or an energy company.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report and is a guest contributor to IEEFA(Institute for Energy Economics and Financial Analysis) based in Cleveland, Ohio, USA. His book ‘The 10 Commandments of the Energy Transition ‘is on sale at




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