Shell Discards Biofuels Project in Rotterdam Amid Market Headwinds

Shell plc SHEL, a British energy giant, announced that it does not intend to restart the construction and development of a biofuels plant at the Shell Energy and Chemicals Park in Rotterdam, Netherlands. The construction of this plant was approved in 2021, with operations initially expected to begin in 2025. However, the development of the biofuels facility was halted in July 2024 due to unfavorable market conditions.

Following a comprehensive evaluation process, Shell decided not to proceed with the project any further. The analysis of market circumstances and the costs associated with finishing the project indicated that the construction would not be competitive. This implies that the project would not be able to meet the demand for low-carbon products at affordable rates. As such, the company decided to drop this project.

Shell stated that the decision not to continue with its project aligns with its strategy of allocating capital toward ventures that serve customers as well as generate value for shareholders. Like several other oil and gas companies, Shell is stepping back on its renewables ambitions and shifting its focus to the traditional fossil fuels business. The reason for this shift is likely due to the capital requirements of renewable energy projects and the comparatively lower returns.

SHEL’s Zacks Rank & Key Picks

Currently, SHEL carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Repsol S.A. REPYY, Antero Midstream Corporation AM and Galp Energia SGPS SA GLPEY. While Repsol sports a Zacks Rank #1 (Strong Buy), Antero Midstream and Galp Energia carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 stocks here.

Repsol is a global multi-energy company, involved in exploration and production activities as well as refining and marketing petroleum products. The company is also actively involved in transitioning toward cleaner and more sustainable energy solutions. This suggests that Repsol is positioning itself in line with global energy transition needs.

Antero Midstream generates stable cash flow by providing midstream services under long-term contracts with Antero Resources. The company’s higher dividend yield compared to its sub-industry peers makes it an attractive choice for investors who seek consistent returns.

Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly the Mopane discovery in the Orange Basin, offshore Namibia. After the initial exploration phase, Galp estimated that the Mopane prospect could hold nearly 10 billion barrels of oil. This discovery allows Galp to diversify its global presence, with the potential to become a significant oil producer in the region.

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This article originally published on Zacks Investment Research (zacks.com).

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