EurOil: Shell resists break-up call

Royal Dutch Shell has rejected a call by an activist shareholder to break up the oil major, arguing that the company works better as a united entity.

Third Point, owned by billionaire activist investor Daniel Loeb, has accumulated a stake valued at nearly $750mn in Shell, and is seeking its break-up. According to Reuters, Third Point argues that the major has “too many competing stakeholders pushing it in too many different directions,” leading to “incoherent” strategy.

The play by Third Point comes as Shell faces unprecedented pressure to go further in reducing its emissions. A Dutch court ruling in May has ordered the major to strive to make deeper cuts in its Scope 1 and 2 emissions, and also address Scope 3 emissions from the use of its products by customers. Shell has responded by stepping up its targets, but still has not committed to tackling Scope 3.

Third Point wants to see Shell split into several standalone businesses, including a legacy one that would focus on oil and gas and another that would commit to “aggressive” investment in renewables and other low-carbon technologies. However, Shell’s management has hit back against the proposal.

“If you were to split that into component pieces, I think that can sound really interesting from a financial perspective,” CFO Jessica Uhl told reporters on October 28. “But in terms of real solutions, I think that breaks down and our ability to integrate and bring these different pieces of the puzzle together will be how we uniquely make a difference in the energy transition.”

Shell CEO Ben van Beurden insisted that the company’s strategy was both coherent and well understood by most shareholders.

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