Shell has abandoned plans to proceed with the construction of a biofuels facility at its Shell Energy and Chemicals Park in Rotterdam, amid challenging market conditions that makes the project uncompetitive.
Shell’s subsidiary Shell Nederland Raffinaderij B.V. has decided not to restart construction of the plant, the UK-based supermajor said on Wednesday, in the latest setback in the alternative fuels industry globally.
Last year, Shell said it would pause on-site construction work at the biofuels plant in Rotterdam amid weak market conditions.
“As we evaluated market dynamics and the cost of completion, it became clear that the project would be insufficiently competitive to meet our customers’ need for affordable, low carbon products,” Machteld de Haan, Shell’s Downstream, Renewables and Energy Solutions President, said today.
“This was a difficult decision, but the right one, as we prioritise our capital towards those projects that deliver both the needs of our customers and value for our shareholders.”
Shell and BP, the European majors, have scaled back billions of dollars of investment in renewables and are now looking to bolster their oil and gas reserves portfolios. BP and Shell realized that the energy transition faces bigger hurdles than expected and doesn’t pay off in profit margins and shareholder payouts the way oil and gas does.
Shell’s chief executive Wael Sawan has said that reducing global oil and gas production would be “dangerous and irresponsible”.
Shell continues to have a presence in alternative fuels, EV charging stations, and the Northern Lights carbon capture and storage (CCS) joint venture offshore Norway, among others.
However, Shell is the latest major to acknowledge that many biofuels projects are not profitable enough to warrant further investment.
Earlier this year, Greenergy, owned by commodity trading giant Trafigura, said it would begin consultation on a proposal to cease production at a biodiesel plant in the UK amid difficult market conditions.
By Tsvetana Paraskova for Oilprice.com
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