Shell bets on petrol stations as electric revolution looms

By 2025, Shell plans to grow its global network of roadside stations by nearly a quarter to 55,000, targeting 40 million daily customers. (Reuters)
Updated 21 March 2018
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Shell bets on petrol stations as electric revolution looms

LONDON: Royal Dutch Shell is placing a big bet on petrol stations and convenience stores in China, India and Mexico as it looks to shore up profits during the electric car revolution.
By 2025, the oil and gas giant plans to grow its global network of roadside stations by nearly a quarter to 55,000, targeting 40 million daily customers, Shell said in a statement on Wednesday.
It will add another 5,000 convenience stores selling coffee and snacks, with growth focused on rapidly growing economies in emerging markets.
Shell, as well as rivals such as BP, sees retail as a way to secure demand for the fuels it refines, as consumption could peak as early as by the end of the next decade due to the growth in electric vehicles.
“We plan to be leading through the energy transition,” Shell head of downstream John Abbott said in an investor presentation on Wednesday.
Already one of the world’s biggest retailers with a well-known brand, Shell expects earnings from its marketing and commercial businesses to grow annually by 7 percent into 2025, when it will deliver $4 billion in earnings.
The company is also rolling out a number of experimental initiatives to introduce electric battery chargers and hydrogen chargers to its traditional petrol stations, hoping to capture some of the growth in the non-combustion engines.
The fuel marketing sector nevertheless faces a risk of overcrowding as many companies see growth potential there, warned Biraj Borkhataria, analyst at RBC Capital Markets.
“We are more skeptical on Shell’s plans in retail, as the market is fiercely competitive and the ongoing threat of EVs (electric vehicles) could put some of that earnings stream at risk.”
The Anglo-Dutch company said its downstream business, which includes refining, trading, marketing and chemicals, will generate $6-$7 billion organic free cash flow per year by 2020 based on a Brent crude oil price of $60 a barrel.
Free cash generation for the whole company is expected to reach $25-$30 billion over the same period. Shell delivered $15 billion in organic free cash flow in 2017.
By 2025, cashflow from downstream is expected to grow to $9-$12 billion.
Downstream proved its importance during the oil industry’s downturn since 2014, providing the bulk of Shell’s profits as the price of crude collapsed.
Shell has in recent years transformed its downstream business by selling some plants and upgrading others, helping the company ride out oil price fluctuations and shifts in demand.
The company is also bracing for a world of “lower for longer” oil prices due to rising oil supplies, particularly from the United States. Shell and others cut tens of thousands of jobs, lowered spending and brought in new technology to simplify field designs and operations
Shell also said it plans to invest $7 billion to $9 billion a year across the business and expects to deliver a return on average capital employed of more than 15 percent.


Saudi Arabia has lion’s share of regional philanthropy

Updated 26 April 2018
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Saudi Arabia has lion’s share of regional philanthropy

  • Kingdom is home to three quarters of region's foundations
  • Combined asets of global foundations is $1.5 trillion

Nearly three quarters of philanthropic foundations in the Middle East are concentrated in Saudi Arabia, according to a new report.

The study, conducted by researchers at Harvard Kennedy School’s Hauser Institute with funding from Swiss bank UBS, also found that resources were highly concentrated in certain areas with education the most popular area for investment globally.

That trend was best illustrated in the Kingdom, where education ranked first among the target areas of local foundations.

While the combined assets of the world’s foundations are estimated at close to $1.5 trillion, half have no paid staff and small budgets of under $1 million. In fact, 90 percent of identified foundations have assets of less than $10 million, according to the Global Philanthropy Report. 

Developed over three years with inputs from twenty research teams across nineteen countries and Hong Kong, the report highlights the magnitude of global philanthropic investment.

A rapidly growing number of philanthropists are establishing foundations and institutions to focus, practice, and amplify these investments, said the report.

In recent years, philanthropy has witnessed a major shift. Wealthy individuals, families, and corporations are looking to give more, to give more strategically, and to increase the impact of their social investments.

Organizations such as the Bill and Melinda Gates Foundation have become increasingly high profile — but at the same time, some governments, including India and China, have sought to limit the spread of cross-border philanthropy in certain sectors.

As the world is falling well short of raising the $ 5-7 trillion of annual investment needed to achieve the UN’s Sustainable Development Goals, UBS sees the report findings as a call for philanthropists to work together to scale their impact.

Understanding this need for collaboration, UBS has established a global community where philanthropists can work together to drive sustainable impact.

Established in 2015 and with over 400 members, the Global Philanthropists Community hosted by UBS is the world’s largest private network exclusively for philanthropists and social investors, facilitating collaboration and sharing of best practices.

Josef Stadler, head of ultra high net worth wealth, UBS Global Management, said: “This report takes a much-needed step toward understanding global philanthropy so that, collectively, we might shape a more strategic and collaborative future, with philanthropists leading the way toward solving the great challenges of our time.”

This week Saudi Arabia said it would provide an additional $100 million of humanitarian aid in Syria, through the King Salman Humanitarian Aid and Relief Center.

The UAE also this week said it had contributed $192 million to a housing project in Afghanistan through the Abu Dhabi Fund for Development.