City comment: Gas crisis could leave Shell CEO Ben van Beurden hot under the collar
John F Kennedy once said: “In a crisis, be aware of the danger — but recognise the opportunity.”
For Shell CEO Ben van Beurden and his colleagues, the opposite might be true: when grasping opportunity, be aware of the danger.
The oil major today told investors that profits from its gas trading business were set to be “significantly higher” thanks to surging prices. In the same update, Shell announced plans to return another $5.5 billion to investors through a buyback.
The two are unrelated: the funds for the buyback come from the sale of its Texas oil business last year, not the gas bonanza. But management should be wary of the public conflating the two.
The gas crisis is a near permanent fixture of front pages at the moment. Half the supplier market has gone bust and bills are set to soar. The Government is holding crisis talks with industry this week and extra support on household heating costs could be on the cards.
Politicians and the public will be casting about for a villain in this saga. Anyone seen to be coining it at the expense of cold pensioners and the taxpayer will be an easy target.
Shell can plausibly argue that it is doing well simply because of global market dynamics. The company is not a charity and selling gas at below market prices to Britain isn’t in its interests. It can’t help it if wild price swings are creating the perfect trading environment.
That argument is likely to carry little water with the public. Van Beurden needs a better story if the spotlight does fall on him.
