Shell’s proven reserves have fallen to 8.1 billion barrels of oil equivalent, the lowest level recorded by the company in more than a decade. According to Wood Mackenzie data, this implies that its useful life of reserves will be reduced to less than 8 years from 2025, an indicator that generates alarm within the sector.
This decline in reserves puts Shell behind competitors such as ExxonMobil and TotalEnergies, which have more than 12 years of useful life each. The gap in future production sustainability has become one of the main strategic challenges for the firm led by Wael Sawan.
Projections point to a shortfall of up to 800,000 barrels per day
Shell estimates that, if no action is taken, it will face a production shortfall that could reach between 350,000 and 800,000 barrels of oil equivalent per day by 2035. This gap not only jeopardizes growth plans, but also its ability to maintain current crude oil volumes stable.
Although the CEO had projected a more moderate gap for 2030, between 100,000 and 200,000 boe/day, Shell has not updated those figures following new analysis, generating uncertainty among investors.
The answer: aggressive exploration and potential acquisitions
The company has intensified its exploration strategy in areas such as the Gulf of Mexico, Brazil, Nigeria, Angola, South Africa and Namibia. Although these efforts have closed part of the short-term deficit, analysts are skeptical about their long-term effectiveness.
Firms such as RBC and Bernstein agree that incremental investments will not be enough. Analyst Irene Himona called Shell’s reserve life “very low” and urged a new focus on exploration or mergers.
Shell bets on liquefied natural gas as a way out of the crisis
In parallel, Shell has redoubled its commitment to liquefied natural gas (LNG). liquefied natural gas (LNG)with the aim of increasing its sales by at least 5% annually during the decade. However, part of this growth will not be supported by its own production, which generates additional dependence on alliances and external purchases.
In his most recent statements, Sawan promised to keep crude oil production stable and to increase hydrocarbons by 1% per year, but the current environment casts doubt on the fulfillment of these commitments without a thorough reconfiguration of the asset portfolio.
An uncertain future that depends on bold decisions
Shell’s outlook reveals a turning point. With reserves in decline, mature projects in depletion and a technology race that does not let up, the company must decide whether to bet on large acquisitions, redouble its presence in new exploratory markets or redefine its operating model.
The industry is closely watching the next steps, in a context where the energy transition is progressing slower than expected and oil remains key in the global matrix.
Source: Reuters