Shell CEO on LNG Demand, Buyback and Growth Strategy

Thanks, Alex. Look, we're very proud of where we are today. Today in the Capital Markets Day, we took a pause and reflected on the journey we've been on over the past couple of years. And the key message was one of trying to instill confidence. Here's a company that has delivered what it said it was going to do and actually overdelivered in certain areas. And beyond that, as you rightly pointed out, we've also today laid out the vision, a vision at the 2035 that has LNG at the heart of it. We believe LNG is going to be a critical part of the energy system and we want to be the leading player. But our story also has lots of richness around wanting to sustain material liquids production and being the most competitive and the most focused energy marketer and energy trader in the world. And so a holistic story that I think we're very proud to be able to say is well on track.

Look at my job. I have to look at 20 years and what I see when I do that is up to 2040. We see a potential 60% increase in overall LNG demand. We have a diversified portfolio, both of production sources as well as demand options. And we are very much looking to leverage that global diversity of production and customer contracts to be able to create value. Importantly, our LNG portfolio is heavily linked to long term contracts that are tied to Brent, which means we have a lot of resilience and so we can ride out the inevitable cycles in this business while making sure that the underlying cash flow continues to come from this business.

Very much what we outlined today, which is 4 to 5% per year, indeed the 20 to 30% by 2030. And that's just to 2030. We see more running room. Beyond that, we have projects that we can evolve over and above that. But what's unique around our LNG business is not just the production piece. We are actually also selling roughly the equivalent amount, not just of what we produce, but also another equivalent amount to that, because we are also one of the largest optimizers of LNG in the market. And so in any year we're selling around 60 million tonnes of LNG, which is significant. And so we are trying to continue to build up our portfolio to really have that diversity and to be able to make sure that we can continue to essentially stay in the 15 to 20% of the overall LNG market, which is what we represent.

So we have a very clear pathway to sustain our liquids production to the tune of around 1.4 million barrels per day between now and 2030. And we have plans to extend that plateau well into the future. So we already have plans in place for that. And so the key areas where we see growth at the moment are our integrated gas business, as we've talked about LNG, but also I would say our marketing business, our mobility business, which is the leading franchise in the world. Our lubricants business, which is another core part of our overall value proposition. So those will be growth trajectories and our sustained liquid production will allow us to have the fundamental underpinning that continues to keep us as a scale company overall.

So what we have is a very diverse portfolio. We have the largest position in the Gulf of America. We have the largest position in Brazil, which are the two premier deepwater basins in the world. It requires a lot of running just to stay flat. So these portfolios are declining anywhere between 4 to 6% per year. So one has to stay running fast just to stay flat. Beyond that, we will look at opportunities and we will continue to look at those opportunities. But of course, we've left the Permian and we believe that the opportunities we have in front of us in the Gulf of America, in Brazil, in many of our heartlands, like Kazakhstan, Oman, Malaysia, those are the places where we want to continue to strengthen our portfolio.

I think there's a couple of dimensions to that question. I'm very pleased with the evolutionary nature of it, and it's important that one footnote in all that discussion is that we have bought back around 20 plus percent of our share register over the last three years. And a big part of what we announced today is we will continue to preferentially lean towards buybacks, having indeed increased the overall distributions to 40 to 50% of our FFO on the trajectory that we're on. We will have quietly bought another 40% of the company by 2013. To me, the revolution is not in singular actions, it's in looking at the life cycle over a period of seven or eight years, if we can buy more than half of this company. That is what is truly going to be differentiated and transformational for our shareholders.