LONDON (March 25): Shell on Tuesday pledged to return more cash to shareholders, mainly via buybacks, trimmed its investment budget through 2028 and raised the prospect of selling and closing some of its chemicals assets.

The oil and gas major raised its shareholder distribution target to between 40% and 50% of cash flow from operations from current 30%-40%.

The world's biggest liquefied natural gas (LNG) trader also said it targeted a 4%-5% annual increase in LNG sales over the next five years and a 1% annual production growth, while keeping oil output stable at 1.4 million barrels per day.

Shell estimates global demand for LNG to rise by around 60% by 2040, driven largely by economic growth in Asia, the impact of artificial intelligence and efforts to cut emissions in heavy industries and transportation.

Shell produced 29 million metric tons of LNG and sold 65.8 million tons in 2024.

The group said in a release on its capital markets day, it wanted to explore "strategic and partnership opportunities" in the US for its chemicals assets and might close some businesses in Europe.

Shell also trimmed its annual investment budget to a US$20 billion (RM88.72 billion) to US$22 billion range through 2028 from previous US$22 billion to US$25 billion range after spending US$21.1 billion last year.

Shell had spent around US$8 billion by the end of last year out of a US$10-15 billion investment budget on low-carbon solutions set for 2023 to 2025. It said by the end of the decade it would have up to 10% of its capital employed — which measures the sum of total equity and debt — in lower carbon platforms.

A Shell spokesperson declined to give an investment figure for its low-carbon businesses beyond 2025.

Shell's shares gained around 1.8% in early trading, outperforming a 1.1% rise of a broader index of energy companies.

"The guidance looks better than expected, with higher cost reductions, capex guidance coming in lower at the midpoint versus consensus, and higher shareholder returns than anticipated," said RBC analyst Biraj Borkhataria, calling the update "boring but good".

Shell has a US$3.5 billion share buyback plan in place for the current quarter, making this the 13th consecutive quarter of at least US$3 billion of share repurchases.

When reporting full-year results in January, Shell hiked its dividend to around US$0.36, in line with its 4% dividend growth policy which it confirmed on Tuesday.

Shell said in the update it aimed for annual free cash flow growth per share of more than 10% to 2030, while delivering between US$5 billion and US$7 billion in cumulative cost cuts between 2022 and the end of 2028.

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