Shell’s former chief executive has stoked fears that the oil company will quit the London Stock Exchange in favour of a New York listing because US investors are “more positive” about fossil fuels.
Ben van Beurden used his first public interview since stepping down in 2021 to echo concerns that the £180bn company is “massively undervalued” by the UK market compared with its US listed rivals.
“It’s a major issue,” Van Beurden told an oil industry summit in Lausanne, Switzerland, on Tuesday.
The comments have fuelled concerns in the City that Shell will abandon the LSE to list on the New York Stock Exchange after its current chief executive signalled that it would consider the move. Wael Sawan told Bloomberg this week that Shell was looking at “all options” for its listing.
The company’s share price is now at a record high of £28.40, in part due to geopolitical upheavals of recent years that have supported higher gas and oil prices. But the company believes it could be worth more. Sawan said: “I have a location that clearly seems to be undervalued.”
Van Beurden admitted that Shell had considered moving its listing to the US in 2021 when the company opted to drop its dual Anglo-Dutch listing and move its headquarters to London, but had decided that leaving Europe was “a bridge too far”.
He told the FT Global Commodities summit that deeper capital pools in the US, and the market’s more favourable attitudes towards conventional energy companies, had made European listings less attractive. This would increasingly be a problem, he said.
European oil companies have typically had lower valuations than US oil firms. In recent years the valuation gap has widened as many European investors have adopted tougher rules on investing in fossil fuels. In response, European oil companies have moved faster to invest in clean energy alternatives than their US counterparts, which is understood to have alienated some investors still eager for fossil fuel dividends.
Sawan took up the top job at Shell with a plan to cut costs and return more money to shareholders as part of a corporate shake-up designed to increase its market value. However, the strategy has put the company on a collision course with green groups which believe that includes plans to water down its climate commitments.
When Shell announced an annual profit of more than $28bn (£22bn) for 2023, one of its most profitable years on record, green activists staged a protest outside the company’s London headquarters.
The company signalled last month that it may slow the pace of its emissions reductions for this decade by setting a new plan to reduce the carbon intensity of the energy it sells by 15-20% by the end of the decade, compared with its previous target of 20%.
Agathe Masson, of the campaign group Reclaim Finance, said the “retrograde step” showed once again that Shell had “no interest in acting for the climate”.