Yahoo Finance Shell dealt $1bn blow from halting construction of green fuel factory
Shell has suffered a $1bn (£780m) hit from its decision to halt construction on a giant European green fuel factory.
The oil and gas giant unveiled the impairment on Friday morning, just days after it paused activity at a site in Rotterdam that was designed to supply European airlines and hauliers with sustainable fuels.
The decision has dealt a blow to airlines’ hopes of offering passengers low-carbon flights, with the company blaming the decision on rising costs and weak pricing.
The facility would have had the capacity to produce 820,000 tonnes of biofuels a year, half of which was to be used for sustainable aviation fuel (SAF) made from waste cooking oil and animal fat.
Sustainable jet fuel has been at the forefront of airlines’ plans to sell flights as “low carbon”, as they strive to reduce the industry’s impact on the environment.
Shell had been touted as a key SAF supplier after its Dutch subsidiary announced the biofuel project in 2021. Operations had been expected to start in 2025.
The announcement was one of a series of setbacks for low-carbon projects by big energy companies.
It follows BP’s announcement last week that it was putting all new offshore wind projects on pause, with new chief Murray Auchincloss deciding to focus increasingly on fossil fuels.
He also halted two biofuel projects in Germany and the United States.
Elsewhere, Shell also announced a writedown of $600m and $800m related to the sale of its refining and chemicals hub in Singapore.
Since taking over as Shell chief executive in January 2023, Wael Sawan has sought to refocus the company’s strategy on oil and gas in a bid to boost profits.
This led to the company last summer dropping a pledge to cut oil production each year for the rest of the decade.
At the time, he said: “The projects which came onstream this past year at their peak will add over 200,000 barrels of oil equivalent a day. They are part of our larger funnel set for start-up by 2025.
“Together at their peak, all projects will add more than half a million barrels of oil equivalent a day to our production.”
