AI and Asset’s Sales: Shell’s Recipe for a Leaner Future – Wael Sawan

In a revealing interview during Shell’s Capital Markets Day in New York on March 25, 2025, CEO Wael Sawan laid out a bold vision for the company’s future.

With a dual focus on slashing costs by $5-7 billion between 2022 and 2028 and reinforcing Shell’s leadership in natural gas and LNG, Sawan emphasized a strategy that marries financial discipline with a pragmatic view of fossil fuels’ enduring relevance.

Shell aims to drive cost reduction by leveraging AI and strategic asset sales, underscoring its critical role as an unsung hero in the global energy transition.

Shell’s Lean Transformation: AI and Strategic Divestitures

Shell is targeting a $5-7 billion cost reduction by 2028, a goal rooted in a multifaceted approach to enhance competitiveness in a volatile energy landscape. Speaking on CNBC’s Squawk Box, Sawan highlighted how this ambition stems from organizational simplification, portfolio optimization, and AI adoption, key pillars in making Shell “leaner and fitter.”

By reducing bureaucratic layers and streamlining processes, Shell aims to boost efficiency, enabling faster responses to market shifts, revamping its procurement practices that cut waste and optimize spending across the company’s global operations.

Strategic asset divestitures are another critical lever. Shell recently sold its onshore Nigeria assets and plans to offload its Singapore chemicals and refinery by late March or early April 2025. These moves aren’t mere cost-cutting exercises, they signal a deliberate pivot toward high-growth regions and assets.

Sawan noted that while the company isn’t rushing to divest its entire chemicals business, it’s open to options particularly in Europe. In contrast, the U.S., home to most of Shell’s chemicals capital, offers opportunities to build scale and partner with others to unlock value, reflecting a focus on portfolio management that prioritizes long-term returns.

AI is the transformative force underpinning these efforts, revolutionizing Shell’s day-to-day operations. “The use of AI in our day-to-day activities… is allowing us to become much leaner,” Sawan explained. This adoption aligns with a broader trend in the energy sector, where digital transformation is reshaping cost structures and driving efficiencies.

Gas: The Unsung Hero of the Energy Transition

Sawan underscored Shell’s conviction that “fossil fuels will continue to play a critical role in the energy system for a long, long time” with natural gas at the forefront. Positioning Shell as the world’s leader in integrated gas and LNG, the company is betting big on this fuel as a linchpin in the energy transition.

Shell’s global portfolio provides versatility, allowing it to adapt to geopolitical and trade policy shifts. The company’s recent final investment decisions in Brazil and Oman exemplify this strategy, targeting regions with better investment security and growth. “Depending on where geopolitics is, depending on where trade policies are, we can be very selective around where those capital dollars are going,” Sawan said. This flexibility ensures Shell can capitalize on LNG market trends while mitigating risks.

Sawan suggested the world is moving toward a more realistic energy transition timeline. According to him, gas often overshadowed by renewables emerges as an unsung hero vital for meeting rising energy demand, especially in developing economies, while supporting decarbonization goals. Shell’s leadership in integrated gas positions it to meet this demand, enhancing shareholder value through a world-leading franchise business.

Shareholder Focus: Cash Flow and Buybacks

Shell’s cost-cutting strategy fuels its commitment to shareholders. Shell announced an increase in cash flow from operations (CFFO) distributions, rising from 30-40% to 40-50%, building on a trajectory that saw distributions at 20-30% two years ago. This shift follows its success in meeting or exceeding financial targets, creating momentum to reward investors.

Shell has also bought back over 20% of its shares in recent years and aims to repurchase another 40% by 2030, potentially the largest capital reallocation in its history. This aggressive buyback program underscores Shell’s confidence in its cash flows and its strategy to deliver long-term shareholder value.

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