UK Markets closed

CERAWEEK-Europe should stop relying on luck for energy security -Shell CEO

A view shows a logo of Shell petrol station in South East London

By Ron Bousso

HOUSTON (Reuters) -Europe should stop relying on luck for its energy security and build new natural gas import infrastructure to replace Russian supplies as several years of uncertainty lie ahead, Shell Chief Executive Wael Sawan said on Thursday.

"We need to move away from depending on luck as a strategy for our energy needs in Europe," said Sawan, who was appointed CEO in January. "I'm concerned we haven't yet structurally resolved that," he said at the CERAWeek energy conference in Houston.

Shell is the world's top trader of liquefied natural gas (LNG), a fuel that last year helped Europe replace a huge drop in Russian pipeline gas in the wake of Moscow's invasion of Ukraine.

Europe was able to fill its gas inventories at a huge cost, benefiting from a mild winter and weak demand from China. Stocks remain about 60% full, but a few weeks of cold could deplete them, he said.

"I continue to be worried about the coming few winters," Sawan said, echoing comments from the head of Norwegian energy giant Equinor.

"Europe will need to be able to get a lot more LNG if it wants to have the security of supply that it wants," Sawan said. "We need more (gas) storage, we need more renewables."

He said the German government made "big strides" by constructing four LNG import terminals in over the past year, two of which are already in operation.

"These are critical, critical, import infrastructure for Europe to be able to have the confidence to diversify the supply system," Sawan said.

Sawan, who is set to unveil Shell's updated strategy in June, said the British company remains committed to an ambition to reduce its greenhouse gas emissions to net zero by 2050.

Shell will focus on decarbonizing its oil and gas production while also moving into renewable energy and low-carbon fuels, he said.

(Editing by Simon Webb and Marguerita Choy)