Our strategy

Our strategy: Thrive in the energy transition, world-class investment case, strong license to operate

Our strategy is to strengthen our position as a leading energy company by providing oil, gas and low-carbon energy as the world’s energy system changes. Safety and social responsibility are fundamental to how we do business.

In February 2016, Shell completed the acquisition of BG Group, adding significantly to our activities in liquefied natural gas (LNG) worldwide as well as deep-water oil and gas production in Brazil.

Shell’s strategy is now centred on creating a simpler company, one that delivers higher, more predictable returns and growing free cash flow per share. By investing in compelling projects, driving down costs and selling non-core businesses, we are reshaping Shell into a more resilient and focused company.

Our strategy is founded on our outlook for the energy sector as well as the chance to grasp the opportunities arising from the substantial changes in the world.

A growing global population and a rise in living standards are likely to continue to drive energy demand, including oil and gas, for years to come. At the same time, technological changes and the need to tackle climate change means there is a transition under way to a lower-carbon, multi-source energy system with increasing customer choice. We recognise that the pace and specific path forward is uncertain and so requires agile decision making.

Against this backdrop, we have three strategic ambitions guiding us in the pursuit of our purpose:

  • to provide a world-class investment case. This involves growing free cash flow and increasing returns, all built upon a strong financial framework and resilient portfolio;
  • to thrive in the energy transition by responding to society’s desire for more and cleaner, convenient and competitive energy; and
  • to sustain a strong societal licence to operate and contribute to society through a shared value approach to our activities.

Shell ambition:

  • Thrive in the energy transition
  • World-class investment case
  • Strong license to operate

Our business

Shell’s business is divided into four areas: Upstream, Integrated Gas (including New Energies), Downstream, and Projects & Technology.

Upstream is responsible for Shell’s Conventional Oil and Gas businesses around the world, Deep water and Shales. It explores for and extracts crude oil, natural gas and natural gas liquids.

Integrated Gas manages Shell’s manufacturing and distribution of LNG and gas-to-liquids products. It includes New Energies, invests in low-carbon energy such as biofuels, hydrogen, wind and solar power.

Our Downstream business manages different Oil Products and Chemicals activities, including trading and marketing activities. Our oil products are sold around the world for domestic, industrial and transport use and our petrochemicals are used by industrial customers.

Our Projects & Technology organisation manages the delivery of our major projects and drives research and innovation to develop new technology solutions.

infographic taken from the 2016 Investors' Handbook, showing our business – please find below the text version/explanation

1. Exploration

  • Exploring for oil and gas: Onshore and Offshore

2. Development and extraction

  • Developing fields
  • Producing oil and gas
  • Extracting bitumen

3. Manufacturing and energy production

  • Refining oil into fuels and lubricants
  • Producing petrochemicals
  • Converting gas into liquid products (GTL)
  • Upgrading bitumen
  • Producing biofuels
  • Generating power

4. Transport and Trading

  • Shipping and Trading
  • Regasifying (LNG)
  • Supply and distribution
  • Liquefying gas by cooling (LNG)

5. Sales and marketing

  • Retail
  • Lubricants
  • Aviation

Strategic themes

Shell manages its portfolio around 7 strategic themes. Each have distinctive capabilities, growth strategies, risk management, capital allocation and expected returns.

Icons of the strategic themes convention oil + gas, integrated gas, oil sands minding and oil products

Cash engines

Cash engines are strategic themes that are expected to provide strong and resilient returns and free cash flow, funding shareholder returns and strengthening the balance sheet. Shell continues to invest in selective growth opportunities for cash engines. Our cash engines are Conventional Oil and Gas in Upstream, Integrated Gas, and Oil Products in Downstream.

Strategic theme icons of deep water and chemicals

Growth priorities

Growth priorities are the cash engines of the future. Shell seeks to invest in affordable growth in advantaged positions with a pathway to free cash flow and returns in the near future. Our growth priorities currently are Deep water in Upstream and Chemicals in Downstream.

Strategic theme icons of shales and new energies

Emerging opportunities

Emerging opportunities are strategic themes that are expected to become growth priorities after further development. These opportunities should provide us with material growth in free cash flow in the next decade or beyond. We seek to manage our exposure to these businesses while establishing scale. Our emerging opportunities currently are Shales in Upstream and New Energies, which is part of the Integrated Gas and New Energies organisation.

Financial framework

A disciplined approach to financial management aligned with our strategy is an integral part of the world-class investment case.

Shell’s strategy and financial framework are designed to succeed through multi-year macroeconomic cycles and multi-decade investment and returns programmes. We balance near-term affordability and cost trends with the fundamentally long-term nature of our industry.

Our priorities for cash flow are reducing debt and paying dividends, followed by a balance of share buybacks and capital investment.

Key features

  • Maximising value for shareholders through cycle
  • Multi-year timescales
  • Surplus free cash flow in up-cycle and dividends fully covered in down-cycle
  • Gearing 0-30%; AA credit metrics

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Share prices

Share price information and charts, calculators and historical share prices.

Annual Reports and publications

The 2018 Annual Report and Form 20-F, the 2018 Sustainability Report and the 2018 Investors' Handbook are now available for online reading and as PDF download.