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Shell trims its spending and increases shareholder distributions, while also aiming to sell more LNG.

Shell trims its spending and increases shareholder distributions, while also aiming to sell more LNG.

Shell pledged on Tuesday to return more cash, mostly via buybacks. It also trimmed its budget for investment through 2028, and hinted at the possibility of selling or closing certain of its chemical assets.

Oil and Gas Major raised shareholder distribution target from 30%-40% to 40%- 50% of cash flows from operations.

The world's largest liquefied gas (LNG), trader, also stated that it aimed to increase LNG sales by 4-5% annually over the next five-year period and production by 1% per year while maintaining oil output at 1.4 million barrels a day.

Shell predicts that global demand for natural gas liquefied will increase by 60% by 2040. This is largely due to the economic growth of Asia, artificial intelligence, and efforts to reduce emissions in heavy industry and transportation.

Shell sold 65,8 million tonnes of LNG in 2024.

In a press release issued on the day of its capital markets event, the group stated that it was interested in exploring "strategic opportunities and partnerships" in America for its chemical assets and could close some European businesses.

Shell has also reduced its annual investment budget from $22 billion up to $25 billion, to $20 billion to 22 billion dollars through 2028. This is after spending $21.1billion last year.

Shell spent $8 billion on low-carbon technologies by the end last year, out of an investment budget of $10-15 billion for 2023-2025. Shell said that by the end the decade, it will have invested up to 10% of their capital - the total of equity and debt – in lower-carbon platforms.

Shell's spokesperson refused to provide an investment figure beyond 2025 for its low carbon businesses.

Shell's shares rose 1.8% early in trading, outperforming the 1.1% increase of an energy index broader.

The guidance is better than expected. There are higher cost reductions and lower capex guidance at the midpoint than the consensus. Also, there are higher returns for shareholders than anticipated," Biraj Borkhataria of RBC said, calling the update, "boring but great".

Shell has announced a share buyback program of $3.5 billion for the current quarter. This is the 13th quarter in a row that Shell has purchased at least $3 billion worth of shares.

Shell's dividend was raised to $0.36 when it reported its full-year results on January. This is in line with the 4% dividend increase policy that Shell confirmed on Tuesday.

Shell stated in its update that it aimed to achieve annual free cash flow per share growth of more than 10% by 2030. It also said that between 2022 and 2028, the company would cut costs between $5 billion and 7 billion dollars.

(source: Reuters)