SHELL has announced plans for a big increase in payouts to investors as it underlined how much money it expects to make in the oil and gas business while supporting the transition to a cleaner energy system.

The oil giant said it expects to increase dividends per share by 15 per cent from the current quarter and to return at least $5 billion (£4bn) to investors through share buybacks in the second half of this year.

The news came in an update on strategy in which the company said it expected to maintain oil production at current levels to 2030 and to remain a leader in the global gas business.

The company was accused by campaigners of backtracking on a pledge made in 2019 to reduce production by two per cent annually to 2030.

"This U-turn from Shell is a climate bombshell and exposes the hollowness behind the setting of such a target," claimed Jonathan Noronha-Gant of Global Witness.

He said Shell had achieved record profits after oil and gas prices surged amid the fallout from the war in Ukraine. These should be used to fund increased investment in renewables rather than payouts to shareholders.

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However, Shell said it had already cut oil production in line with the target set in 2019, helped by moves to rationalise its portfolio.

A spokesperson for the company said: "Our target of a reduction in oil production by 2030 has not changed. We've just met it eight years early."

New chief executive Wael Sawan said oil and gas will play a crucial role in the energy system for a long time and insisted Shell is making good progress with its plan to become a net-zero energy business by 2050.

This will involve cutting the emissions associated with its production operations and with the output it sells to customers. The company will use the profits generated in the oil and gas business to fund investment in green energy sources as well as increased payouts to investors.

“We are investing to provide the secure energy customers need today and for a long time to come, while transforming Shell to win in a low-carbon future,” said Mr Sawan.

“Performance, discipline, and simplification will be our guiding principles as we allocate capital to enhance shareholder distributions, while enabling the energy transition.”

Shell said it plans to invest less in new projects than previously forecast and to reduce operating costs. It will use the savings to underpin increased shareholder distributions.

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There was no mention in the announcement of how the changes will impact on the UK business.

Shell retrenched in the North Sea during the last downturn as it sold off fields deemed non-core and shed hundreds of jobs. It employs around 1,200 people in its North Sea business currently.

In December 2021 the company shelved controversial plans to develop the Cambo field off Shetland citing economic factors and the potential for delays. Chief financial officer Sinead Gorman reiterated recently that the economics of Cambo did not work for Shell, which has put its stake in the field up for sale.

Mr Sawan has said the introduction of the windfall tax last year would make it harder to justify investment in North Sea projects.

However, the company last week welcomed the Government’s decision to introduce a price floor. This will mean the tax rate reverts to 40%, from 75%, if oil and gas prices fall below specified levels.

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It said last week that the price floor should help to improve investor confidence in the UK North Sea, which will remain crucial to maintaining Britain’s energy security in coming years.

Shell has continued to invest in the North Sea since the windfall tax was introduced in May last year.

In July it approved plans to develop the Jackdaw gas field east of Aberdeen.

The company recently underlined the potential to increase the profits generated from existing assets after revamping the Pierce field east of Aberdeen.

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Its partner in Pierce is Ithaca Energy, which hopes to develop the Cambo field.

Shell said payouts to shareholders are expected to total 30-40% of cash flow from operations through the cycle, compared with 20-30% previously.

Capital spending will be reduced to $22-25 billion per year for 2024 and 2025, from $23bn to $27bn.

The company plans to invest $10-15 billion across 2023 to 2025 to support the development of low-carbon energy solutions.

Shell aims to reduce annual operating costs by $2-3 billion by the end of 2025.

The company paid a first quarter dividend of $0.2875 per share. It launched a $4bn share buyback plan in May.