Royal Dutch Shell on Thursday made the boldest statement among its peers about the waning of the oil age, saying that its oil production had reached a high in 2019 and was now likely to gradually decline.
Shell’s “total oil production peaked in 2019,” the company said in a statement, and added that it expected a gradual decline of oil production of around 1 to 2 percent annually in coming years.
The company also said that its carbon emissions had probably peaked in 2018.
Shell said it was beefing up its previously announced effort to reach net zero carbon emissions by 2050 with tighter interim goals. The company also emphasized that its emission reduction targets would include those of customers, which account for 90 percent of the company’s emissions.
The announcement won praise from some activist investors. says that its zero carbon goals include those of the products its customers purchase.
All the European oil companies are under pressure from governments and investors to reduce their emissions, but Shell is taking a somewhat different route from rivals BP and Paris-based Total, which have been bulking up on renewable energy producers like offshore wind farms. BP and Total recently won options for offshore wind leases off Britain in an auction that others regarded as high-priced.
Ben van Beurden, Shell’s chief executive, told journalists on Thursday that =Analysts, though, said there was little new in Shell’s announcement about future investments, and the company’s commitments to invest $2 billion to $3 billion a year in renewable energy like wind and solar lagged some of its peers in terms of the proportion of capital spending allocated.
“Despite the green spin, the substance would suggest a more cautious approach to renewables,” said Stuart Joyner, an analyst at Redburn, a market research firm.
Even before the pandemic wiped out demand for oil last year, energy companies were preparing for a gradual flattening in the world’s appetite for oil, which has trended upward for decades.
Demand has revived somewhat since last spring’s collapse, and oil futures returned to their pre-pandemic levels on Monday, but many legacy producers, especially those based in Europe, are transitioning to a future of cleaner energy, investing more in renewable sources like wind, solar and hydrogen.
Some companies, like BP, have said they will reduce oil and gas production substantially over time. But Shell, a company whose roots go back to kerosene sales in the 19th century, seemed to go further on Thursday, declaring that the year before the pandemic hit would be the high point for its oil production.
Shell has previously hinted that this might a possibility. Ben van Beurden, the company’s chief executive, suggested on a call with reporters last year that the peak might have already occurred.