Decrease in Shell's stock prices following a pessimistic forecast for LNG (Liquified Natural Gas)
Shell, the world's largest LNG trader, is facing questions from shareholders about its LNG strategy and its alignment with climate commitments. The concerns come at a time when the company is expecting lower gas production and LNG sales in Q4 2022 compared to the previous quarter, attributed to the expiry of hedging contracts taken in 2022 to protect against potential loss of Russian production following the invasion of Ukraine.
The shareholder resolution, filed by three UK pension providers and the Australasian Centre for Corporate Responsibility (ACCR), challenges Shell's LNG strategy. The resolution calls on Shell to justify the assumptions behind its LNG growth strategy and to explain how its LNG growth strategy aligns with the company's climate commitments.
The ACCR, a prominent critic, has urged shareholders to vote in favor of the resolution, citing a widening gap between Shell’s LNG demand forecasts and its net zero targets. The resolution has sparked investor pressure for more comprehensive disclosures, but Shell maintains its LNG growth strategy, emphasizing operational progress such as the first cargo shipment from its 14 mtpa LNG Canada facility in June 2025 and growth targets for LNG sales of 4–5% CAGR to 2030.
Despite the resolution and scrutiny, Shell's Q2 2025 results highlight continued investment and portfolio actions in LNG, alongside structural cost reductions and shareholder distributions. This suggests Shell is committed to its LNG strategy but is engaging investors for further dialogue about its climate alignment and risk management.
In response to the shareholder concerns, Shell has embarked on a "listening tour" with institutional investors to clarify its LNG demand projections and address concerns raised about the bullish LNG strategy and its transparency. The "listening tour" reflects Shell's intent to address investor concerns directly following the resolution and to improve communication and transparency regarding how its LNG strategy fits within broader energy transition goals.
As energy prices have steadied and global oil demand faltered, the world's top oil and gas companies have seen profits decline throughout 2024. LNG is expected to account for nearly a third of Shell's upstream hydrocarbon production by the end of the decade. The shareholder resolution remains active following the 2025 Annual General Meeting (AGM).
Meanwhile, Exxon Mobil Corp. has signalled that sharply lower oil refining profits and weakness across all its businesses would reduce its Q4 earnings by about $1.75 billion from the prior quarter. The decline in profits across the oil and gas industry underscores the challenges these companies face in balancing their growth strategies with climate commitments and investor pressure for transparency.
- Shell's LNG strategy, a significant part of its energy transition goals, faces scrutiny from shareholders over its alignment with climate commitments, as they question the assumptions behind its LNG growth strategy.
- The oil-and-gas industry, including Shell and Exxon Mobil, is under pressure to balance their growth strategies in LNG and oil refining with climate commitments, as investors call for greater transparency and risk management.
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