So, before we open up for Q&A, let me just run through the key messages that I hope you take away from today. Given our belief that oil and gas will continue to play an important part in delivering energy security for the foreseeable future, we will be sustaining our liquids production while growing our leading integrated gas portfolio through 2030. We are clear on the pathway to high grade and improved performance in our marketing and chemicals and products businesses.
We will continue to utilise our molecular and customer capabilities by growing our low carbon fuels and EV charging businesses. Both represent attractive opportunities wherein we can leverage existing adjacencies and play to our strengths in our differentiated downstream business. Underpinning all that, we will be ruthless in our focus on performance, discipline, and simplification, and you heard Sinead outline our plans to get the most out of the OpEx and the CapEx that we spend. All of this supports our ambition to grow free cash flow per share by greater than 10% per annum through 2025, and most importantly, provides us with the confidence to increase our distributions to 30 to 40% of CFFO through the cycle, and hence today, we have announced our intention to increase the dividend per share by 15% and to set a floor for buybacks of $5 billion for the second half of this year. This is why, as I outlined earlier, I believe Shell will be the investment case through the energy transition. With that, I'd like to thank you, and I'd like to open up for Q&A and invite my colleagues to join as well.
All right. We're going to go for the Q&A now. Okay. Go here. Yeah. Thank you, Michael. Yeah. Thanks. Ryan Todd, Piper Sandler.
Maybe a question as you think about the longevity of the oil and gas business, particularly on the liquid side, maybe a couple of things. On the on the 500,000 barrels a day, by 2025, a big chunk of that on your slide is other projects. Maybe a little bit, is that a lot of tieback kind of infill opportunity? Is there maybe any visibility on that, and then as you think about the post-2025 timeframe and your resource base, in the queue in the back there, there are basically two deepwater projects in there.
What can you provide in terms of confidence in terms of the depth of the resource base that you have to sustain this in 2025+, and in recent years, you've been more of a seller than buyer of resource. Is there an opportunity, and is that optically possible for you guys to participate on the M&A side in terms of not just on the disposition of assets, but even on the acquisition of resource as well? Great. Thank you. I'll very quickly touch on the last part and then ask Zoe to provide some details around the underlying strength of the portfolio. You're right.
We have been a more of a seller, as we have really looked to high grade our portfolio in line with the strategy that we outlined a couple of years ago, when we classified our core lean, and then over time, we looked to tighten that into what is today, I think, a much stronger portfolio, high graded portfolio. As we look into the future, we will indeed be looking at opportunities to continue to grow, mainly organically, but there is nothing that would prevent us. I think you sort of alluded to, would we be concerned about buying a resource? Absolutely not. We are committed to this business, and we will go after the resource as and where there are opportunities to create value from it. We don't anticipate we need it, but what we will do is we will continue to be selective in our approach if we see the right opportunities coming. Zoe? Yeah, and I think it's on slide 24 that you're referring to.
Overall, the other does include a lot of projects in our conventional oil and gas business, where we see relatively stable production and significantly less decline. So, things like PDO in Oman is an example where we've got a relatively stable business that's consistently growing to offer us that upside. Overall, about, in that chart, you've got about 40% of it comes from deepwater, just shy of 40% of it comes from conventional oil and gas, and then just above 20% comes from LNG growth. I think, just to sort of circle back on to the resources, we shared, the commercial resources that we have, have about 20 years of life, and so, we've got a really strong portfolio, particularly in the deepwater and the LNG business. The commercial resources are done on the basis of a P50 estimation, and they do include projects that are pre-FID, which is quite different than what you would normally see in the SEC proved reserves, and I think it's important to draw that differentiation, because a lot of people do extrapolate our proved reserves as sort of the longevity for which our upstream business has access to, and there are some quite unique aspects to deepwater and LNG which can make it more difficult to actually record proved reserves that you don't get when you look at the broader commercial resources, and I'm happy to go into those in detail.
It's mostly around sort of the confidence. If we choose to take sort of spot market risk, and we don't have a supply contract at the end of the LNG chain, then you can't actually do the reserve bookings in LNG, as an example, and deepwater, you tend to find you have less analogues and details around well tests, which again, means it's difficult to get the proved reserves higher. So, I think, as a result, we're really confident. When you look at the world-class capabilities we have in deepwater and LNG, that's where we have most of our commercial resources.
They're the reasons you don't see them come up in proved reserves, because they have unique aspects in the way that they're recorded, but the longevity of the business still is very strong. -Thanks. -Cool. You go, there, Alastair? Hi, Alastair Syme from Citi. Firstly, on the… I don't want to go back in history, but in 2019, the target for 2025 was $35 billion of free cash flow. We're now at $25.
I think I understand from Huibert’s explanation about what's happened in the downstream. I'm less clear of where the negative revisions have come in upstream integrated gas. So, maybe you could just help with that, and then secondly, while we sit here in the in the halls of the New York Stock Exchange, how do you approach the re-domicile question? I think we can all see that US companies trade on higher multiples, because there's a bigger pool of investor capital that wants to invest in energy. You know, how do you approach that question? Great. I'll take the second one, and Sinead, if you want to sort of link up between the two strategy days/ Look, I think, firstly, to recognise we have a very strong presence here in the US to start with. It's the place where we have the largest capital employed in one country.
It's the place where we are spending the most capital amongst any other country we're spending in. It's where we have the largest staff base, 12,000 people, and we have a significant investor base here. So, the US is a critical part of a portfolio, of a global portfolio along with the likes of Brazil and the likes of Australia, the likes of Qatar, which really underpin the strength of this portfolio. So, while we're headquartered in Europe, we are a global company, first and foremost.
I think, to your point around multiples and realisation of the multiples, what we have been very clear on with this sprint is there's a lot of self-help that we can do. The focus on performance, discipline, and simplification is just to get our house in order on all fronts, to be able to unlock the full value potential, and we always have options to be able to unlock further value, portfolio-wise, or in other means later, but at the heart of it, if we can get our cost structure into the right place, if we can get the distributions into the right place, and if we can demonstrate, or if we can actually embed the confidence in the market, we believe that we will significantly grow the value of this company over the coming 2-3 years and create more options for us as we go into the next sprint. Sinead? Thanks, Wael, and I'll keep it short, because, Alistair, you alluded to it perfectly.
Of course, different price lines that come through in the period and, of course, different portfolio underlying. So, as you can see, what we provided for 2025, you'll see in the appendix, actually, we give you quite a lot of depth in terms of the price lines and include the mid-cycle scenario for some of the chemicals and products side of things as well that flows through, but fundamentally, what you’re looking at here is free cash flow per share increasing, and that's really what we're going after, the 10% growth that you see between now and the end of 2025. So, that's what we're trying to deliver for shareholders, making sure we really increase the intrinsic value there as well. Thank you.
Thanks, Sinead. Going next. Irene, we haven't had Irene. I'm trying to be evenly spread.
Sorry, guys, I'll come to everyone. Thank you. Irene Himona, Societe Generale. Firstly, a question on power, if I may, just to clarify something. Perhaps I missed it, but I wasn't clear whether you have maintained or dropped the previous target to double electricity sales by 2030, and my second question: you announced today the intention to reset various parts of the portfolio in the pursuit of value. Is there an explicit asset disposal plan for ‘23-‘24? Thank you.
Thank you for that. Let me take the first one, and then in terms of the overall portfolio, I think maybe I’ll invite Huibert, if you want to say a few words on the specific asset disposal plan. On power, like everything else, the target has been dropped when it comes to volumes, because it was driving the wrong outcomes. We potentially might grow volumes, but only in service of value creation, and so, at this stage, we have retired that target, and we'll focus much more on how do we create that integrated value.
Huibert? Yeah. On the disposal plan, we're implementing quite a large disposal plan in our ambition to drive value over volume. So, first, it was alluded to, how we're disposing of our B2C energy business in Europe, which will save us around $300 million of operating cost per annum. Today, we've also, announced our intent to sell our 77% interest in Shell, Pakistan, and we've seen quite some international interest.
Further, we've, now, we're going to do a strategic review of Bukom and Jurong and then, of course, what I mentioned around the European Energy and Chemicals Parks. What we're still disposing of and that's ongoing is our interest in PCK Schwedt in East Germany, former East Germany, and in our joint venture, Mero, near Stuttgart in Germany. Also, we are continuing with the divestment of our South Africa refinery.
So, a lot’s happening in that side. Are there more things that we could possibly dispose of? Definitely, but we will continue to drive that in the mantra which we're having here around it's all around promise, deliver the performance, show me the discipline, and then let's drive the simplification. If you cannot do that without the returns, we'll have a review.
-Thank you for that, Huibert. -Cool. Okay, here we go. Amy, I'll come around. Don't worry. Hi, it's Amy Wong from Credit Suisse, and thanks for letting me double dip. My question is one topic, but a few parts to the question.
It's on your 2-4% return on capital employed enhancement from trading and optimisation. I'd like to understand how that is at the same kind of range for all the different businesses, firstly, and then, secondly, I think a lot of the majors and yourself and your peers talk about how integrated everything is. So, internally, how do you guys count, like what is the 2-4% return enhancement, what's operation, and maybe the third part to that question is, internally, how do you incentivise the right behaviour between the people who are running the operations and the people who are trading and optimising? Super. Thanks, Amy. Can I suggest Sinead, if you want to take the first couple and then maybe bring it to life, Huibert, with the third one around incentives? Certainly. Thanks, Amy. That's quite a series of questions there. In terms of the trading optimisation, exactly.
We say that we see it, or we expect it to have 2-4% of an uplift, which is based on what we have seen historically. So, there's a few things in there as well. So, you ask specifically, is it a range depending on where it is? So, you heard Zoe talk earlier about the fact that, for integrated gas, we really do see it in that range, and really at the higher end of that range. It does differ across businesses. What's really quite fascinating here, though, is the idea that what we do really well is moving things around and optimising according to where we can get value, and that's what a TNL organisation does. The ability to implement that, which we're doing really, really well in the integrated gas business, and to implement that in biofuels, as an example, that's where we can really make value.
So, you do see differences between them at the moment with expectations to hopefully be able to replicate across, but it averages 2-4% across it. In terms of just how do we, well, sorry, you were going to go to the operational… No, no, I think important is trading and optimisation is a huge competitive advantage we have over many other peers, and it's in our DNA. It's in our culture. Our culture is Shell transport and trading company. So, we've worked like that for over a hundred years.
How do we do that in practice? Well, if I look at how do I optimise a refinery, I have the trader sitting next to the economic and scheduler, sitting next to the channel optimiser. They run the value chain, and then the trader determines where do I see the most value and the crude flexibility I want and the product flexibility I want? What do I make? What do I buy, or what do I sell? So, that's how it works in practice. The other thing to say is that, if you look at trading optimisation, we have a very strong mobility business, which we will further improve, but we operate in more than 80 countries. We only have refineries in five of them.
So, trading optimisation is trading optimisation distribution, it's terminals, it's road transport. That's what ensures the entire flow of products. So, it's very much integrated between, say, the various businesses that we have, and many of the people in trading optimisation actually do come from the other businesses which we have.
So, that's a very natural coordination, and I think a huge competitive strength, particularly in a volatile world. All right. We're going to go here. Oh, here first. New voices in the room. It's good. Hi. Yeah, this is Colin Temple from Westwood Global.
Last time we were here, I think it was in response to what we kind of saw the middle of last decade, but there was a lot in terms of capital planning that revolved around lowering break-evens, reducing payback periods, and that was kind of seemingly the framework for which capital was being allocated, and today, we're hearing a lot more about IRRs, and so, I'm just wondering how much of a philosophical change there's been in that capital allocation process and how that's impacting some of the decision making. Thanks for the question. Zoe, do you want to bring that to life in upstream integrated gas? Yeah, I mentioned it in the presentation.
I think the hurdle rates are one component, but they're by no means the be-all, end-all, and I think that's evidenced when you look at the 2023-2025 production that we're bringing on board. We have a $30 breakeven point, which you could argue is very competitive and certainly brings to life, I think, a lot of our competitive strengths. So, I think we still look at an array of different factors, as we're starting to understand how best to do capital allocation.
I think the other thing worth mentioning is perhaps it's a proof point of our strategy, but relative to 2014, where we saw a fairly similar macro to what we saw in 2022, we were able to generate, in our upstream business, 80% more cash with 20% less production. So, that focus on margins, which I showed against our IOC majors, is significantly differentiated relative to other performance. So, I think really strong business, definitely focusing on value, and making sure that it's leveraging our competitive strengths. Thanks, Zoe.
Good. All right. We go now, Christian, we get the same voices in the room. Others, please don't hesitate here as well.
Okay, yeah. Giacomo. I just, when you think about your focus on value, and I've got two questions. What I don't, I can't, I'm struggling to reconcile, is in one part of your business, you're, what do you want to achieve, 25% plus returns and IRR, and then in your power business, you've got projects that are at 6-8%.
How can you justify being… the range is so wide, but how can you justify being in businesses that are that low, particularly with the risk/reward being somewhat muted, if interest rates continue to rise, and it becomes more difficult? That almost feels like an aspiration. So, I just wanted to stand your thinking around, you know, portfolio allocation in terms of returns with that range across projects and assets. The second question, and coming back to the 25+ horizon, no risk, no reward, and I think about your sort of macro outlook, and it sort of concerns me that, if you can't deliver or sort of articulate what's going to happen beyond 25 from a macro perspective, how can we, and I think of that in the context of projects that, if you were to sanction them now, could come online in five years, because it takes time, and specifically Namibia. Now, why can't that be sanctioned earlier? Is it because you're sort of waiting to see what the macro is before you then sanction the projects? So, maybe it's a slightly unfair question but just trying to work backwards from a mid-term outlook. Thank you. Great. I'll address the second one and then maybe ask, Sinead, if you want to go for the first one.
Look. So, I think the reference prices we provide, the $65 per barrel real term as well as the $4 Henry Hub and the like, give you a frame of where our thinking is around the reference. So, that holds. Clearly, when we look at investment decisions, in particular in our upstream and integrated gas business, paybacks typically are a bit longer, and so, you need to have a longer-term perspective. Everything we're doing between 23 and 25 is with that frame of mind, is with that frame of mind, that sort of macroeconomic outlook that you are going to, of course, have volatility and uncertainty, but 65 RT like a good place to be. That doesn't mean that we don't continue to focus on resilience.
The $30 per barrel resilience gives you that downside protection, and critically, back to Zoe's point earlier, we want to continue to go for those high margin barrels, which also, typically, go into more of tax royalty schemes that allow you to enjoy some of the upside. So, from a portfolio building perspective, you are, of course, taking a view on post-2025, but what we are saying at this moment is that from a capital allocation perspective, 23-25 is now clear. We have, of course, a good view of what it might be in 26 going forward, but that has to be on the basis of real delivery and track record from the different businesses, so that we can allocate that capital going forward. Let me invite you, Sinead, for the next one. Certainly, and Christian, let me be really clear. The IRRs we're talking about today are hurdle rates.
They are not the average across the portfolio. So, you will see a range in there as well, which of course, does mean, yeah, you're going to have some that are incredibly high. I mean, I think, Zoe, you mentioned in your presentation, the near-term ones, particularly in the Gulf of Mexico, are of considerable IRRs, greater than 25%, etcetera, but what you're really alluding to, if I read it right, Christian, is the 6-8% in power is really where you're going to on that. When we look at any of the different projects we look at, we look at, first and foremost, run your economics, put your carbon prices in, and everything else. Where does it fit? Where does it fit on the IRR? Does it hit the hurdle rate, yes, or no? Then I can actually look across them and say, does it fit my strategy, and fundamentally, after that, does it actually change the energy system in some way? So, do I see it being advantaged into the future, regardless of which way it goes? So, that's how we play it out in our own minds.
The 6-8% on power we've talked about. I mean, Huibert, you talked about it very well in the sense of saying we're not going to go into generation for the sake of going into generation. This is about enabling a number of things. First and foremost, it's about decarbonising our own assets. That is part of what we have to do in terms of running our business.
Secondly, it's about providing the returns to the customers, or providing what they need at that point in time, and beyond that, it's also about providing the future of the ability to decarbonise for molecules, in other words, green electrons into green molecules, where we are very confident we will be able to make superior returns. So, when we talk about a 6-8% return, that's the base. You then build upon it, whether it's through Steve, through trading, whether that's through delivery to customer needs, etcetera, and we integrate around that. So, I'll go back to the fact it's a hurdle, not anything else. Cool. Thanks.
Yeah, we're going to go to Giacomo now first. Very good. Thank you. Giacomo Romeo, Jefferies.
First question: I would like to go back to that 2-4% return from trading, and particularly, in the context of all the portfolio changes that have happened in downstream and all of the potential changes that could be coming with strategic reviews, and sort of what you've discussed in the presentation is, at what point your, as you shave assets, your ability to generate these type of returns comes down. I mean, how do you assure that you will be able to retain that level of… the ability to add value via the trading of these organisations as you lose physical assets? The second question is around the lower carbon. You provided some helpful EBITDA references through 2030, and you don't have one associated with hydrogen and CCS.
Is it just, do you see those projects really as just an enabler for you to decarbonise your existing physical assets, or do you think that, by 2030, you will have the ability to develop a market and actually to generate some EBITDA from outside the organisation out of those assets? Good. Let me take the second one. I'm going to come to you, Huibert, for the first one in a moment. So, to be ready. So, the… look, we could put an EBITDA number on hydrogen and CCS, but I would be deeply uncomfortable with the credibility of that number, given this is a market that is literally nascent, and the business models are being developed.
So, what we are doing at this stage is saying, transparently, we are putting some capital into this, because we fundamentally believe we have a differentiated capability. We are looking at these double-digit returns when we go into that market. So, we have to be able to string a pathway to achieving that, but to start to pretend that I can give you a number at the latter part of the decade, it might be good for the models, but in all reality, it's not something that I would hold as credible. I would hope in the next 3 to 4 years, as we bring the likes of a Holland Hydrogen 1 on stream, and as we take advantage of some of the policy and regulations that are in place, and as we look at how customers respond to it, we'll have a much clearer line of sight as to what is actually the business model and what is the sort of EBITDA that can be generated, and so, we have tried to ground as much of the numbers we gave you today in reality and in real line of sight, while being transparent on how we're allocating the capital to create options for the future. Huibert? Yeah, thanks. On the trading and optimisation side, I think, 25 years ago, we might have had 55 refineries.
Early 2020, we had 16. Now, we're going back to 5 to 4. Yet we increase a lot of the value we have in our trading and optimisation.
How is that possible? Well, we take a lot of supply contracts, and we take a lot of offtake contracts as we go through this. The example of biofuels, I think, is a clear one. We blend and trade 14 times as much as we produce, and that's the context that you can look into. So, I used to run trading and supply for Europe and Africa, and what I'm really interested in is flexible logistics.
What I'm interested in is the marketing short, and then I can organise the flow around it, and then I can determine not only what can I make myself, but what do I want to blend, or what do I just want to buy. So, that flexibility, that's the DNA of our organisation of trading and supply. It’s not just around can you produce it yourself, and therefore, can you trade around it. So, I think that's very much an evolution, and we have much more opportunity to take that even further across downstream and renewables, and also, we're making… also, I want to make clear that all divestment or investment decisions we take is very much on an integrated basis around what do we think the value for trading and optimisation would be. So, when we acquired Nature Energy for $2 Billion December last year, it was also very much from a mindset, okay, how can that help bolster that great biofuels trading desk that we have, just to bring that into perspective.
Cool. All right. Going to Oswald now. Thank you very much again for the opportunity.
I wanted to ask about levers if things go wrong, just walk through some of those key levers that you have at your disposal, and also, including in their tax risk. I mean, Kazakhstan's coming for money. Brazil's getting money.
The UK, I'm sure you've lobbied, but it hasn't quite worked just yet in terms of decreasing that fiscal tax burden. That's the first thing, and then secondly, the 2030 free cash flow number, which is… it's not a hard number, it's a fuzzy shaded bar chart, but it's $30 billion. You talked about being deeply uncomfortable giving hydrogen numbers for 2030, but are you comfortable giving this $30 billion number here, in the context of the comments of your stock being undervalued? If we could believe that number and start to discount that, it's quite interesting. Thank you.
Thanks, Oswald. Can I suggest maybe the levers, if you want to touch on that, Zoe, given I think, Oswald, a lot of it was in the context of also tax challenges, and maybe Sinead, if you want to talk to the 2030 free cash flow. So, yeah, I think on the levers, I'd bring it back to performance, discipline, and simplification, because in essence, performance is really about getting value from the installed capital that we have. So, when you hit a lower macroenvironment, it's very much around how do you optimise within the capital envelope that you've already invested in, and so, the sorts of choices we can make are around what operating expenditures we may put into WRFN activities, right, the world's reservoir and facility management, because they're the sorts of activities that have different incentive curves on the back of the macro. So, we can make choices around OpEx to ensure that we're investing prudently around the incentive to optimise the existing capital installed, and of course, we can also, as it comes to discipline, thinking through where we should add additional capital, because it can either be countercyclical, where we see better access to whether it be rig rates, or whether it be opportunities to go into a market at a given time, because we've got confidence in the long-term capabilities that we've got for the business. So, I think the way in which we invest capital also has some leverage points, of course, as the market cycles.
So, yeah, very much one around performance, very much around how we then invest capital through the course of time. I'll take the fuzzy bar. Thanks, Oswald. Indeed. So, as we go out looking to 2030, I think what you see there is a good indication of where we expect it to be, given the conditions that we've outlined.
However, of course, there is upside. There is volatility in the market as it plays through. What we are very, very confident on, so, per Wael’s comment in terms of going out for hydrogen, what we put in there, we can and will deliver. We have levers to pull, I think.
So, you put it perfectly. So, if, for instance, hydrogen ramps up, we will have Anna make sure that she is really going much more heavily into that. If it's in low carbon fuels, we'll make sure it's covering that as well. You will see us be dynamic in our response, and that's what you will see. So, we have the variability to be able to move between those. I'm absolutely convinced, have complete conviction that 2030, the numbers we're giving you, we can and will deliver, but we will make the choices, I think, on your OpEx and CapEx, Zoe, as well.
You know, if something were to go wrong, which I hope it does not, but if something were to go wrong, of course, sitting at $22-25 billion of CapEx, we've pulled CapEx below $20 billion before during Covid. This has to be about value. This shouldn't be about pulling levers for the sake of meeting a target.
It's about creating value at the end of the day. All right, let's go. Okay, there. Victor Swishchuk with Letko Brosseau in Montreal, Canada. My question is: we keep hearing there's underinvestment in the upstream side of the business and globally, especially when it comes to comments coming out of OPEC justifying why oil prices are high.
So, the question is, especially when it comes to the developed world and companies representing the developed world: is there a desire, or do you think there will be a desire to increase upstream production at some point, especially given the fact that, if you look at the OECD countries, they consume 46-47 million barrels a day, produce only 30. So, we're naturally short, and we're beginning to see that national security plays an important role in ensuring that we can continue to live the lifestyles that we do. Thank you. That's a big question. Look, I think we haven't minced our words around this. The world is under-investing, and what we find at the moment is… just look at last year, right? I mean, just last year, the massive amount of volatility that was resulting from that 1% drop in overall energy supply, I think, speaks volumes to the fragility of the overall system, and therefore, what we need to do is to continue to make sure that while we are continuing to grow, as we must, low carbon investments, we need to make sure that the 4 or 5% decline rates that you see in the sector, you need that investment to be able to at least hold flat if not grow, because growth is what's happening.
If you look at the majority of the locations where we are invested from a production perspective, it tends to be actually places like Brazil, Qatar, Australia, the US, less so, in Europe these days, right, and that short is growing into Europe, and so, the message we would continue to echo is this has to be a balanced energy transition. This has to be an energy transition that is looking to invest in the oil and gas the world needs, until that dependence starts to diminish, which we don't see for a while to come. This is a much broader topic with politics involved, societal desires.
What we are trying to do is to be factual, but also, actually intentionally lean in to support some of those low carbon solutions, which are absolutely required in places like Europe, but also, around the world, and so, we hope that balance that we bring today is seen and is recognised, rather than actually swinging the pendulum one way or the other. Great. All right. Okay. Paul, you go for a second one.
Thank you. Sankey Research. Clearly, you've come to, and referenced trying to narrow the gap, the huge valuation gap that there is between the US major oils and the European major oils, and there's an obvious similarity between the three European major oils, which is that you're located in Europe. You gave an excellent answer as to why you should relocate the company to Texas. You didn't explain why you should stay in a place where governments are hostile to you, and where US investors perceive you effectively to be government owned. However, I'll give you another shot at maybe explaining why you should stay in Europe. The bigger, more exciting thing might be to split Shell, and I just wondered where, clearly the differentiation between Shell, Total, and BP is your global LNG business, which is clearly a global leader in a clean energy.
Why wouldn't you release the enormous multiple differential that is implicit in a publicly quoted LNG company versus the Shell multiple currently? Thank you very much, Wael. Yeah, great question. Look, a couple of things.
I think firstly to recognise we're not trying to emulate a European model or a US model of valuations. What we're trying to do is to maximise the value of this investment thesis, an investment thesis that is leading in integrated gas, an investment thesis that is leading in our differentiated upstream business, but also, an investment thesis that has capabilities that nobody else has, that Huibert alluded to: our marketing businesses, our trading businesses. If you become purely an upstream business, you are going to have to have a very clear and compelling decarbonisation strategy for the future. Why split up a company to then force either side to have to go back to what it was before we split it up? The beauty of what we are offering, I think, is an investment case that says you can actually play across the multiple energy vectors in spaces where you have a leading franchise in almost every part of it. Nobody can offer you that.
In terms of where we list, right now, we've just moved over to the UK. There are all sorts of reasons people give me around, you should move here, you should move there. What we have said is before we think about moving anywhere, we want to focus on unlocking the value that we know sits in the enterprise, and for the next 2 to 3 years, that's what we want to do.
To be able to unlock that value creates real options for us as an enterprise to be able to do whatever it is that we think is the right thing to do at that point in time. Also, let's not forget, for us to move anywhere, we need over 75% of our shareholders to support that vote. So, there are realities that I wouldn't gloss over in a world where we need to be able to really focus our 93,000 folks in delivering the value that our shareholders deserve out of holding us. All right. Getting to the last couple of questions before lunch.
So, let's see someone new. Kim, relatively new. Hi. Thank you.
It's Kim Fustier from HSBC. I had two questions, please. The first is on low carbon spending. Within that $10-15 billion range of CapEx guidance to 2025, how much you spend, within that range. Is it about acquisitions or farm downs, or is it about whether certain projects do come to fruition or not? I'm just trying to reconcile that with an earlier comment you made about, if you add up spending in power low carbon fuels and EV charging get to roughly $5-6 billion per annum. So, that would tend to indicate that's above the sort of $10-15 billion cumulative.
So, I'm just trying to reconcile those numbers. My second question is on distributions. With the guidance of at least $5 billion of buybacks in H2, are you essentially committing to $2.5 billion of quarterly buybacks going forward, and did you consider, at any point, giving guidance on an absolute buyback range, I think similar to what your US competitors do, in order to give perhaps more visibility, rather than as a percentage of CFFO? Thank you.
Great questions. Sinead, do you want to just cover both? Sure. So, in terms of, Kim, the low carbon spend, indeed, it covers the range of different aspects that you said.
We will go back to the overall principle of value. So, that's what we will look at as we go through those. So, Huibert has a range of different things which are about the normal day-to-day business, where we will spend, and where we have confidence, but there are also, some opportunities that he and the team are looking at that will come down to do they actually hit the hurdle rates, do they have the carbon footprint, all of those different things as we go through. So, it gives us the $10-15 that we've given across it. You then said about the $5 billion.
Let me be really clear. It is a minimum of $5 billion for the next two quarters. So, what we have basically said, so, for the second half of this year, a minimum of $5 billion will be paid out. So, in effect, what am I doing there? I'm creating a floor for it. So, that is what we are doing there. We haven't said how we will play that out quarter to quarter.
We'll be pragmatic on that. Kim, you know we always are from that perspective as well. There are so many different ways you can do this. Could you give a guidance out for several years? Absolutely, you could, but what we are looking at is making sure that we make decisions in the moment, rather than getting stuck with a target of however many billion for five years out, which doesn't make rational sense. This is about us allocating capital where we see it makes sense, which is why, at this moment in time, it is about doing buybacks, and we'll continue to do so.
Thanks, Sinead. All right. Last question. Where are we going? Yeah, Roger. Thank you. Roger Reed Wells Fargo. Maybe the dog that didn't bark.
Two things that haven't brought up today. One, something on the exploration side, whether or not that's needed. You did mention the resource base. The other one is part of a longer-term sort of cost reduction or just automation of the company.
Anything on digitisation or AI or anything like that? Super, yeah, you want to take the first one? I'll take the second one. Yeah. The exploration ones are relatively easy. I mean, I said in the speech that we don't anticipate doing any new frontiers post-2025. That's consistent with the message we've given.
Historically, you see, there's a definition of frontier exploration in the back of the book, which I think is worth drawing your attention to, but we do see exploration as still being quite important, particularly around near-field and around our hubs, and so, we will continue to prosecute exploration opportunities around the areas where we know we've got that geological expertise to drive value. The other thing I think just worth noting is that I think our opportunity to develop exploration will be balanced around whether we should be investing in exploration or acquiring or putting our capital or money elsewhere. So, we'll make prudent decisions around what we think is the most value between exploration or acquisition, as the opportunities get evaluated. Thanks, Zoe. I think an elegant way then to finish on looking at the future.
I mean, firstly, to say, this company’s strengths today are built on the pioneering spirit of those that came well before us. If you look at what anchors us today, it is our LNG business that we developed very much in the late 1950s and 1960s, our gas to liquids business, our deepwater business, including starting here in the Gulf of Mexico, in places like our chemicals business with linear alpha olefins. That is really that pioneering spirit we are looking to rekindle, and so, later in the break, Robin is here. Robin is leading our projects and technology organisation as of July 1st. The mandate Robin has is how do we now really change the orientation towards one of innovation and focusing on how we're going to create the next winners for the future.
On digitalisation specifically, we're very proud of how far we've come in that space, and there's multiple examples which we can also discuss in the break. I was particularly comforted recently going to meet folks at Microsoft just to ask them, give me feedback as I come into this job and about digitalisation in Shell, and their feedback was instructive to me. They said, you can be slow in picking up digital technologies. It takes you guys time. Your risk tolerance maybe is not as high as it needs to be, but when you guys touch it, and you decide to scale it up, no one can beat you, and so, that's the mental model that we want to approach.
We want to try to be able to become a bit more confident in our approach of new and novel technologies that could potentially unlock value, but also, to be able to make sure that we use the leverage of the scale of Shell to really create the value, a bit like what I… the example I gave earlier, the 1-2% improvement in LNG was very much on the basis of technology that was evolved, and so, we will be shameless in going out and borrowing technologies and looking at our real capabilities around system integration to pull those technologies into a place where we can apply them to create value for us as an enterprise.
2023-06-26