Shell plc (SHEL) Earnings Call Transcript

Welcome. Ladies and gentlemen, good afternoon. I'm Tjerk Huysinga, Executive Vice President, Investor Relations in Shell, and I'm very happy to facilitate this event today. It's a pleasure to welcome you all at the Annual ESG update. It's been a long, long time since we've got together in a person, and I think I'm very happy to see you all here. So it is really exciting and some people might come as well. We have got an interesting agenda planned for all of you, and we'll start with a plenary presentation by Ben, our Chief Executive Officer. Then we'll take your questions. Sinead Gorman, our recently appointed Chief Financial Officer; and Ed Daniels, our recently appointed Strategy Sustainability & Corporate Relations Director. They will join Ben for the Q&As. You'll be able to ask questions in the room, and I'm going to guide you through that or by typing your questions in the box and I'll get them here on the screen, and I'll -- sometimes I might read out some of them. Please note that we ask you to indicate your name and company when you type your questions, but it's also useful when you do that here because I might not know all of you. For any unanswered questions as normally, Investor Relations will aim to follow up with you later on. Ben's plenary presentation and the Q&A session will be streamed online, and we have people joining us via webcast. The plenary speech will be published on our website later on, and the session will be recorded for internal purposes. After the plenary, we'll end our online part of the agenda. We will then have 2 fireside chats running in parallel. Ben will talk about the impact of the war in Ukraine on the global energy system in a session hosted by Lydia Rainforth from Barclays, and Sinead will address our capital allocation priorities in a session with Martijn Rats from Morgan Stanley. These sessions will then rotate. And after that, we will have some refreshments and an opportunity to say farewell to Jessica Uhl, who served as our CFO for the last 5 years. With this, let me hand over to Ben Van Beurden, Chief Executive Officer of Shell.

Well, thanks very much, Tjerk. And thanks very much, ladies and gentlemen, for being here. It's really great to see you all again. And some of you are, of course, watching us from afar. But of course, quite a few people here in London with us here, and that's absolutely wonderful to see old and new faces back again. . Now last year, we presented our strategy, we called it Powering Progress. And we set out some targets to accelerate the transition of our business towards a net-zero emissions energy business by 2050. And today, what we're going to do is tell you all about the strong progress that we have made in a time of, frankly, great uncertainty in the world. Now we're also going to talk about what this uncertainty really means for the strategy and really what comes next. Let's start with the uncertainty and what does it mean. Of course, the world has changed a lot since last year. The war in the Ukraine, frankly, still shocks me every day, as I'm sure it does you as well. I feel revulsion And I feel sadness because it's so tough for our colleagues in the Ukraine. And frankly speaking, our colleagues in the region. But at the same time, it's also really impressive to see how they are responding to an almost impossible situation. And that's why I feel this pride. I'm proud of every colleague in the Ukraine, who continues to go to work every day to keep energy supplies flowing in a country that is dealing with a really frightening conflict, and, of course, dealing continuously with fuel shortages as well, which is really important to keep everything going. And what impresses me most is how all these men and women are adapting to radically changed circumstances. Now the war in the Ukraine is, of course, one of the most significant reasons people are having to adapt. But in recent years, of course, it hasn't been the only way in which people had to adapt. Think of COVID, think of the cost of living crisis that we are experiencing in so many countries. Think of climate change to just name a few. And all of these have forced people, countries, but also businesses to adapt as well. And this is also true for Shell as a whole. We have been adapting in response to the war in Ukraine. We are working on our withdrawal from Russian hydrocarbons include crude, including petroleum products, gas, liquefied natural gas. And we have been seeking to replace these Russian supplies, for example, by adding new gas supplies like we are doing from our Colibri project in Trinidad & Tobago. A part of this natural gas in Trinidad & Tobago goes into LNG exports. And of course, you all know that LNG can help the current worldwide supply crisis because LNG can be shipped to parts of the world where it is needed most, including places that are currently so dependent still on the Russian pipeline gas. Now we are already the world's leading supplier of LNG before this crisis started, but we can now use this position of strength to help countries replace supplies. For example, by delivering LNG to a new terminal that is going to be built in the German port of Brunsbuettel. So as I said, the world faces the ongoing and the urgent challenge of climate change as well. With all the uncertainty and change going on in the world and the need to adapt, some of you may ask, is Powering Progress strategy that is going to transform Shell into a net-zero emissions energy business by 2050. Is that strategy still the right one? Again, our strategy actually withstand the fuel shortages that I just referred to or inflation and the extremely volatile commodity prices that we are seeing and kind of cut emissions while at the same time, also creating shareholder value. Can it deal with a call for a secure supply of energy all around the world and make sure that energy is actually reliable, sustainable and of course, affordable. Now I believe it can. I think our strategy is still the right one. And the reason for that is actually quite basic because Powering Progress was always meant to be a strategy that fundamentally changes the company. So it has, in a way, adaptation at the core of its logic. Because Powering strategy is designed to deliver results today, which is, of course, very visible in our quarterly results on a quarter-by-quarter basis. And Powering Progress is also designed to continue delivering results by seizing the opportunities that are with us in the energy transition. It is designed to pursue value, take opportunities to grow and become even more competitive and resilient as we move towards 2050. So this means that we are focusing even more than we did on our customers. It means having our staff completing thousands of courses on skills that will be needed for the energy transition as such. And it means radically transforming the company's portfolio over the next decades. Now let me give you some examples of what this adaptation all means in practice. So to start, last year, we completed one of the most effective reorganizations in our history. We are now operating in a much smarter way, a much more focused way and with significantly fewer people. But we've also simplified our share structure and we've moved Shell's headquarters from the Netherlands to the U.K. And these changes really have given us much more flexibility, which will help us deliver more value to our shareholders. Our financial performance over the last few quarters has been consistently strong. And this, of course, is an important starting point. The company, of course, must create value for shareholders today, but this cannot be the only metric to judge our investment case. Because apart from creating shareholder value, we must also respect nature by recognizing the growing urgency and taking into account biodiversity and protect biodiversity to preserve water quality and to use resources much more efficiently. But also as a company that is in energy, we must power lives by supplying energy for those who needed most and by being a diverse and inclusive organization. So in 2021, for example, 47% of all the graduates that we hired were women. On our Board, the ratio is 50-50. All of our employees and our senior leadership, around 30% of them are again women. So we are making progress here, but I would also be the first one to admit there is much more to do. We can do better, and we should do better. Another way to judge our investment case is by our readiness for the future, of course, because the world is changing. The energy sector is changing and most importantly, the type of energy that people are using is changing all the time as well. So more and more customers want and need low and 0 carbon energy. And as more people use this energy, this is also then where the profits of the energy sector will migrate to. So energy companies just like everyone else in the world will have to change. To give you some examples of how our portfolio is changing. So recently, a few weeks ago, we announced the acquisition of Sprng Energy Group, which is one of India's leading renewable power platforms. And we won bids for offshore wind here in Scotland that will produce enough renewable electricity to power every Scottish household twice over. In fact, today, we have about 50 gigawatts of renewable generation capacity in our operation, under construction or in the funnel for development. But we're also building a comprehensive network of charging points for electric cars. During last year, for example, we grew our worldwide network by about 50% just in 1 year. In total, we are increasing our spend on low and zero-carbon products and services, so the OpEx combined from around 1/3 of our global spend today to about 50% by 2025. And that includes energy products and services. So think of biofuels, hydrogen, power, nature-based solutions, carbon capture and storage, but it also includes convenience retail, and within that, charging for electric vehicles. And then the remainder is in our chemicals and lubricants business, which do not produce energy products and therefore, do not create carbon emissions when they are being used by our customers. Quite the opposite. As a matter of fact, some of our products are actually carbon negative. Now we're also making good progress on our expected 1% to 2% per year reduction in oil production towards 2030. For some -- and maybe even for some of you, this is just not fast enough, and not moving fast enough out of hydrocarbons. But I believe that Shell has the right pace to help the world through an orderly energy transition with a secure supply of energy, that maintains supplies of oil and gas where they are needed still. And that will also get the company in time to be a net-zero emissions company. And to that effect, we have set climate targets that we firmly believe are aligned with the more ambitious goal of the Paris Agreement on climate change, which is to limit the increase in the average global temperature rise to 1.5 degrees above pre-industrial levels. And last month, we published a report on how we're actually delivering against these targets. Now to start, by the end of 2021, we have reduced the absolute emissions from our operations and the energy that we use to run our operations by 18%. That's 18% compared to 2016, and it's on a net basis. And our target, as you may know, is to achieve minus 50% compared to 2016 by the end of this decade, and of course, 0 by 2050. Now cutting these absolute emissions from our operations is important. But we have another target that is perhaps even more crucial. And that's the target to bring down our carbon intensity, the carbon intensity of our entire company. By the end of last year, we had reduced the net carbon intensity of the energy products that we sell to society by 2.5%, and that's also compared to 2016. So net carbon intensity, minus 2.5%. That means that it is within the range of the target that we set 2% to 3%. Now you may say 2% to 3% doesn't really sound like a lot. So let me give you some context. Last year, the world's economy experienced a very intensive recovery, which meant 6% growth in GDP, but also a 6% increase in CO2 emissions. And last year, worldwide, there was absolutely 0 improvement in the world's carbon intensity. So a 2.5% reduction in the phase of that reality is actually quite significant. And moreover, the reductions will now quickly become much larger. So we have set a target of 9% to 12% reduction in carbon intensity by 2024, 2 years from now. And of course, you all know that milestone -- all these milestones are actually tied to our executive pay of 12,500 people. And carbon intensity is not just crucial for us. It is also important for the world. And let me illustrate that with a simple example that talks about the relevance of intensity. Now you all know, I hope, if you are regular travelers that we sell a lot of aviation fuel. As a matter of fact, I believe we have the largest market share. But now imagine that we decided to just stop selling this fuel, imagine that we decided to just stop all our kerosene production, we stopped supplying our customers and just leave this sector altogether. No doubt that will bring down our absolute emissions from aviation to 0. And it's not insignificant. But would it actually help the world to come closer to achieving net-zero emissions. Would now -- because we stopped supplying aviation fuels with now fewer planes depart from airports, would you stop traveling? I don't think so. Because if Shell supplied less kerosene, it would not mean that people would fly less, it would simply mean that airlines don't buy less fuel, they would buy it from somebody else, from other fuel companies, and the total demand for fossil fuels would not change at all. But now imagine a second scenario, a different scenario here. What if Shell continues to sell aviation fuel, but more and more the fuel that we sell is going to be sustainable aviation fuel. And so we help our customers change the type of energy that they use. Now that's what we are doing. And I believe, actually, it's the best solution for both our shareholders but also the best solution for society because together with our customers in aviation, we are working to change energy demand. We are working on ways to help increase the use of low carbon fuels and therefore, decrease the carbon emissions from this aviation sector. And on the supply side, because we are selling more sustainable aviation fuels, we can now plan to expand. So in Rotterdam in the Netherlands at the moment, we took an investment decision last year to build a 820,000 tonnes a year biofuels facility. And this will be among the largest biofuels facilities in Europe, producing sustainable aviation fuel, but also renewable diesel made from waste and made from certified sustainable vegetable oils. And this sustainable aviation fuel, of course, will not replace all the kerosene in the world in the next few years. Will take many years, maybe even decades to do, but it will start to lower the emission from aviation as a whole. That will bring down the carbon intensity of the energy products that we sell in aggregate. And that is the difference between reducing an intensity of emissions by gradually improving the energy use of an entire sector, or letting go of customers in this sector altogether and just leave it to someone else to deal with these customers and those emissions. That is the difference between walking away from a problem or stepping up to be part of the solution. And we want to be part of the solution, and that's why we are stepping up. And that's why we are working with sectors that need help from energy companies like us with expertise and experience to find a path to net-zero emissions and to deliver on the pledges of our customers. And aviation is a really good example of one of these sectors. But it's not just aviation. In the same way we are working together with our customers in shipping, doing something similar or analogous or heavy-duty road transport or industry or the production of chemicals. And we are investing in the technologies that help all these individual sectors find their own path to net-zero emissions. That include the biofuels that I just mentioned, also wind, solar power, hydrogen, carbon capture and storage, and ways to offset emissions by planting trees and preserving nature. And in this way, apart from bringing down our own emissions, we also help customers adapt. And that brings me back to our strategy, Powering Progress. Our strategy, as I said, was designed to withstand changing circumstances without losing sight of our targets and our goals. Like I told you, it has adaptation at its core. It factors in the different ways in which energy markets make a difference. And in doing so, our strategy helps us deliver a secure supply of reliable, sustainable and affordable energy to the world. And that's a tall order, but we will not shy away from it. But no company can do this in isolation. So we will continue to work with our customers, with governments, and with you, our shareholders, and therefore, we need your support. Last year, when we set out our Powering Progress strategy and told you how we are planning to transform the company into a net-zero emissions business both purposefully and profitably, your support for this strategy was absolutely overwhelming. And you show this at the vote at our Annual General Meeting. And this year, we again have an AGM vote, but this year, it's about the progress that we have made in the last 12 months. And I personally think, as I just pointed out to you, that we have actually made impressive progress. Again, to give you some context. According to data from the IEA, the International Energy Agency, almost all activities in the global economy produced more carbon emissions last year compared to 2020. Just trying to think of any sector that succeeded in reducing emissions. Power generation did not. Industry as a whole did not. Transportation did not reduce emissions. Emissions from all these sectors went up in 2021, but at the same time, our emissions came down. So the progress in the energy transition made by companies with integrated energy strategy like the one that we have are clearly ahead of what we see in most sectors using energy. And I'm encouraged to see that some large institutional investors and shareholders like the ones that we also have in this room and are listening in have started to recognize the importance of having an integrated energy strategy as well. And on that particular basis, I ask our shareholders to support our energy transition progress report during our AGM. And when I mentioned the AGM, I also need to say something about Follow This. The Follow This resolution, calls for targets that would conflict with the Shell strategy. So many of you actually agree with the Shell strategy. In fact, I believe this resolution could be harmful to that strategy. Now the formal notice of meeting goes into great detail what we mean here. So let me just give you a few examples to illustrate it here. The Follow This resolution promote targets that go much further that even the most progressive pathways set to net-zero for our sector. So for instance, the pathway of the IPCC and the pathway of the International Energy Agency. What's more, these IPCC and IEA pathways include actions by all parts of society. This is a society-wide pathway. But Follow This suggests that we should reach these targets on which is simply unrealistic for Shell as a single company to achieve. And most tellingly, Follow This resolution focuses solely on changing the supply of energy. And this approach would mean that we would have to abandon our customers and shrink our business. And that's, of course, fundamentally different to Shell's energy transition strategy as you hopefully took away from the example that I gave on aviation and reduce the emissions from aviation. So we believe that a dramatic change in demand for energy is just as critical as the required changes to supply for the energy transition to take place and to succeed. And this then means both supply and demand, working together with governments, working together with society and crucially working together with our customers where the demand is all based. So in short, the Follow This resolution is simply unrealistic. It would not help reduce the world's energy or carbon emissions, and it is not in the best interest of you, our shareholders. Since the Follow This resolution rejects, in fact, the Follow This resolution opposes our strategy, voting in favor of Resolution 20, should the Follow This -- our resolution and Resolution 21 at the same time actually sends a really conflicting signal to us. So I'm asking you to be clear what you really want us as a company to do. So during the AGM, we asked to vote and support for the progress that we have made in the last 12 months and to not vote for a change in our strategy by pursuing misguided targets for our company as suggested by Follow This. Because I believe we have made significant progress. We are reinforcing Shell as an energy business that delivers a secure supply of energy in places where it is needed most. We are changing into a business that's going to achieve net-zero emissions in line with the Paris Climate Agreement, and we are strengthening Shell as a business that generates value today, but also value into the future. And I hope, I really hope we can count on your support again. Thank you very much.

Thanks, Ben. A couple of logistical points. First of all, you might wonder what's this QR code. You cannot get actually the slides with the QR code. So don't worry to use it. We will now start the Q&A session. Sinead, our new CFO; Ed Daniel will do the Q&A together with Ben. We have people online and in the room. And I'd like to ask you if you want to be on camera and which some of you might want, you have to stand up. If not, you can sit down, you have to put up your hand, then you can get the microphone from Priscilla, and she will run around. And then you get -- you can get the question and when you have the microphone. And as I said before, please say your name and firm because that will be useful. If you're joining us online, please type your questions in the box on your screen and indicate again your name and company when you type your questions. So I think we'll start with 1 or 2 questions here in the room. So who wants to start? Can we go here, Priscilla.

Anish Kapadia from Palissy Advisors. One of the things that stood out from the presentation, it's an ESG presentation, but is very intensive -- energy intensive in terms of emissions. And there's a whole spectrum of ESG. And one of the issues I wanted to focus on is looking at things actually from the other side though, you look at the industry, the lack of investment has gone into oil and gas over the last 5 years or so, the cutbacks in CapEx. It's one of the reasons behind the very high prices you're seeing in terms of oil and gas at the moment. And it's creating problems all around the world in terms of energy poverty. You're seeing it even in the developed countries. But you've got people in the developing countries that have got to make a choice between switching away from actually dirtier fuels to cleaner fuels and you've got the economic consequences as well. So my question really is, how much are you thinking about the consequences of your actions of not investing enough in energy when we're clearly going to need a lot of fossil fuels over the coming decades.

Yes, it's a good question. It's very topical. Let me start and then see whether my colleagues want to add to it. I think, first of all, you're absolutely right. It -- there is a significant reduction in investment in oil and gas in the last few years. As a matter of fact, when I was speaking with [indiscernible] some time ago, and we talked about the IEA net-zero emissions scenario that came out a year ago. We both sort of said, well, a year on with this strategy or this scenario, we are roughly 2.5 years behind already because we have been traveling in the opposite direction. And as a matter of fact, the only thing that we agreed on was on track with the IEA net-zero scenario was the investment levels in oil and gas. And that's exactly the problem. So the industry in terms of investing has done its piece, not necessarily because we took serious note of the scenario, but simply also because of the pandemic, because of all sorts of other pressures where we felt cash preservation and the direction the company needs to bring us to another place. I would imagine it will take some time for people to step up again investment in oil and gas. But it doesn't mean, by the way, that we are investing less in energy. We're just investing in different energy. So if I want to look at provision of secure, affordable and reliable energy in India, I'd much rather see what we can do with solar rather than to see can we bring more kerosene and diesel to India, and/or can we invest in the upstream, Wouldn't that be a great idea. So I think altogether, our investment levels on energy as such, are still intact. It's just that the portfolio is changing quite significantly. But we need to make sure that, indeed, all that investment that we direct to these newer energy forms is also relatively evenly spread around the world. If we want to talk about reducing fuel poverty or energy poverty, not just in Northwest Europe, but also in the Africa and other parts of the world, we better make sure that some of our strategy very clearly focuses on investing in these areas as well. But I'd like to content that we are still investing as much in energy as before. It's just a different form. And I believe it is also a form that is strategically more advantaged in the future.

All right. Next question, Martijn?

It's Martijn Rats from Morgan Stanley. I just want to build on that question. One of the things that sort of struck me over the last couple of days, it fits in the same context, to be honest. Is the -- the German government is now looking for LNG supplies to fill the regas terminals that they have announced to build. And both from sort of interactions in that the German government has had with U.S. providers as well as with the Qatari government, it's very clear that there's a clear mismatch in terms of the duration over which the German government is willing to commit to take supply -- to be a source demand versus what the suppliers are looking in terms of the duration of supply. I mean like the suppliers are willing to sign 20-year contracts and the Germans are basically looking for a 5-year contract, sort of. And I was wondering if you had any observations on how that gap between short term and long term can be bridged? Is there something in specifically the LNG system or the wider energy system that allows us to have short-term energy security, while still having long-term energy transition.

Yes. I can take that question as well, but then I think after that, we're going to switch it around a bit. You're absolutely right. Yes. And I think this will take a little bit of a time, Martijn, to settle out. Of course, we will say, well, this year is a bit tough. So can you please build a few new LNG plants for us in the summer and then deliver some gas to us over the winter. And then maybe next year, we don't need it anymore. That obviously is not realistic on multiple levels. And I don't think that's the way it's going to play out. If we need to replace 120 million tonnes worth of gas currently coming from Russia into Europe, I'm not sure but all of it will have to be replaced. But if you want to start replacing it and some of it with other gas, we will have lasting supplies into the continent. Now does it all need to come in long-term contracts? I don't think so. As a matter of fact, we are the largest LNG player in the world. We don't have everything signed up on long-term contracts. For starters 1/3 is short-term contracts, quite often spot or one of few cargoes at a time. And many of our long-term contracts are 10 years [ or 5 years ]. Another thing is the strength of a company like us, which is a portfolio company when it comes to supply and demand, we can mix and match. And we can just say, fine, we're going to layer in a few relatively short-term contracts because we don't necessarily need that 1 contract from Germany to underpin a new LNG plant in country X it will just come from our portfolio. And it has been our strength all along, and we're going to use that strength, of course, also now in dealing with the [ transient ], the security situations that we're having in Europe. But I think, Martijn, it's too early to just say this is hard for play out. And having engaged with the German government myself quite intensively over the last few weeks, deep down, they realize that as well. This is not a 1-year problem.

Perhaps 1 small build, Martijn, would be I think governments around Europe in particular, I have to realize that if they want to get the competitive supplies of energy, I think renewables are going to be a fundamental part of that. And they're going to have to start to debottleneck and think through the time scales between concept and reality of renewable supply, whether that's solar or wind or otherwise. Because at the moment, I think they're just far too long. We need the help from governments in order to debottleneck and then make much faster those sort of approvals and permissions for new facilities.

All right. Just for people online, we haven't got any questions online at this moment, which is fine, but you can type in the box, and then we'll use your questions. So who wants to have another question here in the room. In the back there?

Maybe switching away from the near-term oil and gas prices to something more of a strategic question. Amy Wong from Credit Suisse. Some of these you guys and your peers are looking at the energy transition and using it as an opportunity to kind of reimagine how services are delivered and you talk a little bit about carbon capture as a service, for example. And the way we kind of see that happening is you probably want to have to supply along a lot of things along that value chain. So if I think about the capture, the transportation, the storage along that value chain, where will Shell stop investing along that value chain? Or will you be present in all those areas?

Thanks, Amy. Ed?

Yes. Thank you. Thank you, Amy, for the question. I think just big picture, CCS, CCUS I think, is a fundamental part of the decarbonization of the energy system. I think we're going to have very significant investments of that across the entire industry. If we look at ourselves, I think we've put a target of 25 million tonnes into the medium term for ourselves and have the investments behind that. If I look at the end-to-end value chain of CCUS, I think we have some core technologies that we've developed on the capture side. I think it makes a lot of sense to do that in large hubs. And so that's one of the areas we're thinking about is large industrial hubs that would need carbon capture, but also potentially need power, potentially need hydrogen. So you could see how that could become a sort of an ecosystem of provision of energy and the taking away of waste from industrial customers. But then also given our experiences in subsurface, I think we can work across that entire value chain from the capture, the compression, the transportation and then the subsurface story. So I think for us, we have a role to play in all of them. Will we play in every single segment, in every single part of the world? I can't guarantee that. But certainly, it's an aspiration we have and I think a good business that we could develop in CCS in its entirety.

Okay, Maurizio.

Maurizio Carulli from Carbon Tracker. Ben, a question for you, if I may. You have said that Shell is planning to decrease the oil production by 1% to 2%, more or less by 2030. And you haven't mentioned anything on gas in terms of more quantitative targets and assume because you think that gas has a role in the transition. Is it possible to have a bit more of color about how long do you think will be this transition role for gas and on when this will expire?

Thanks, Maurizio. It's in the 1% to 2% per year, not by 2030. It is annually. And I'm sure you've -- just wanted to correct because people could misinterpret. And of course, we have done an awful lot more than just 1% to 2% in last year, selling the Permian is a significant step down in production levels as well, both oil and gas for that matter. But you're right, we put that metric out there for oil production. And for gas, we said, well, with this declining production, gas will increasingly become a bigger part of the mix on a percentage basis, yes. So we haven't really said, will we grow our gas business or not. I think probably -- it will probably be flattish for some time to come. Of course, you have to bear that gas demand, particularly LNG demand because that is what I'm referring to here is growing all the time. It is -- it has been growing consistently through ups and downs at about 4% per year. And there's no reason to believe in today's environment that we're going to see any decrease in that 4% per year. As a matter of fact, I think that's probably conservative given where we are today geopolitically. So -- and of course, gas has better carbon credentials than oil and definitely then coal provided you're a responsible operator, which we are. And therefore, we think that gas will have quite a bit of running room. Now how long? It depends a little bit on your scenario. But even the IEA scenarios talk about gas all the way beyond 2050, of course. With gas you have to be careful, Maurizio, because it is a much longer life infrastructure that you are building. Whereas, for instance, our deepwater business, which is the core of our upstream will decline at 50% per year. Gas doesn't, and therefore, you build infrastructure may be around for a long time to come. And therefore, whatever gas facilities we built need to be first quarter [ or current ]. And that is what we have very firmly committed to as well. And I think therefore that gas will have a longer running room. And ultimately, over time, I can also see that this LNG business that we have will get replaced from a fossil gas business to a biogas business increasingly, particularly for transportation. So yes, gas bridge to the future, transition fuel, but in a way, also a destination fuel in combination, of course, with carbon capture and storage or other mitigation measures.

Okay. I've got a question online. So let me first go online and then I'll come into the room again. So it's from Olivier [indiscernible]. His question is regarding natural gas and methane emissions, how can you help the entire value chain and beyond your own operations to reduce leaks.

Yes. Thank you, [ Olivier ]. I think methane is a really important component of our ESG story. I think if you are not an absolutely top quartile world-class performant in terms of methane, I think that is problematic from a climate perspective. I think the best thing that we can do, we're obviously a party to a number of different arrangements with governments with -- also with other companies in the methane protocols, et cetera. I think the best thing that we can do is be a thoroughly best operator in the industry, demonstrate our credentials, I think 0.06% is the current number that we've got in terms of our leakage rate, which is pretty much up there in terms of world class, but also to work with others to say, how can we be better tomorrow than we were yesterday. Work with the folks that are obviously increasingly improving the techniques and the technology about leak detection, about understanding and mitigating methane leakage and sharing that across the entire industry, being a sort of a leading -- if I may put it this way, being a leading beacon of how this can be done to be world-class in terms of the methane credentials of the entire value chain.

Right. We're going to go in the room again Biraj and then go to Lucas.

Biraj Borkhataria from Royal Bank of Canada. Last week, you hosted an energy transition event. And one of the comments you made, Ed, was that Shell has moved away from the in step with society metric, which we've been thinking about feels quite significant. I'm just trying to understand how you have a customer-focused strategy where you're selling 5%, 6% of the world's energy. That is not necessarily aligned with society over time. Can you help me kind of circle those 2 things together?

Sorry, you said at last -- customer?

You have a customer-centric transition strategy, want to bring the customers with you. But you're saying your strategy is not necessarily going to be in line with society. How do I square that?