Shell Faces Shareholder Pressure Over LNG Growth Strategy

Shell plc’s SHEL ambitions to lead the global gas and liquefied natural gas (LNG) market have encountered resistance from a significant portion of its shareholders. At its recent annual general meeting (AGM), over 20% of investors backed a resolution calling for greater transparency around the company’s gas-heavy strategy, citing concerns about climate commitments and long-term economic risk.

Shell is betting heavily on gas in anticipation of a 60% global increase in demand through 2040, primarily from Asian markets. Based on the bolstered demand predictions, the company plans to grow its annual LNG sales by 4-5% until 2030, and increase the annual top-line production in its integrated gas business by 1%.

Shareholder Concerns: Risks and Transparency Gaps

The resolution, filed by three U.K. local authority pension funds and the Australasian Centre for Corporate Responsibility, urged Shell to clarify how its aggressive gas investments align with climate goals. Critics argue that Shell’s exposure to LNG outpaces industry peers, and that projected demand from Asia may fall short if cheaper alternatives or stricter global emissions regulations emerge. They also added that shareholders lack sufficient data to evaluate the risks associated with Shell’s gas-heavy strategy.

In accordance with the U.K. listing rules, companies are obliged to explain how they will tackle shareholder concerns if they receive a shareholder opposition of more than 20%. Therefore, in this case, Shell will have to meet the shareholders’ concerns and provide a proper explanation.

SHEL Defends its Role in Energy Transition

Shell’s CEO, Wael Sawan, defended the company’s approach, asserting that gas plays a vital role in displacing more polluting fuels like coal and heavy oil. He pointed to gas —the largest contributor to lowering CO2 emissions —as a practical enabler of the energy transition, especially as renewables scale up.

Sawan also argued that LNG infrastructure is essential to support renewable energy by stabilizing electricity grids, citing recent blackouts in Spain as a cautionary example. He affirmed that Shell remains committed to reducing its emissions footprint through carbon capture and storage initiatives.

What’s Next: Shareholder Consultations Ahead

The 20.56% protest vote requires Shell to engage directly with shareholders and provide an official response within six months. The company acknowledged that the protest was consistent with past climate-related dissent and promised a detailed “summary note” ahead of the next AGM.

Shell’s next steps will be closely watched as the company navigates the tension between its gas-centric growth plans and mounting investor pressure for climate-aligned transparency.

SHEL’s Zacks Rank & Key Picks

London-based Shell is one of the primary oil supermajors — a group of the U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #4 (Sell).

Investors interested in the energy sector might look at some top-ranked stocks like Prairie Operating Co. PROP, Global Partners LP GLP and RPC, Inc. RES. While Prairie Operating and Global Partners currently sport a Zacks Rank #1 (Strong Buy) each, RPC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston-based Prairie Operating is an independent energy company engaged in the development and acquisition of proven, producing oil and natural gas resources principally in the United States. The Zacks Consensus Estimate for PROP’s 2025 earnings indicates 389.05% year-over-year growth.

Global Partners is a Delaware limited partnership formed by affiliates of the Slifka family. Global Partners owns, controls or has access to one of the largest terminal networks of refined petroleum products in New England. The Zacks Consensus Estimate for GLP’s 2025 earnings indicates 17.84% year-over-year growth.

Atlanta, GA-based RPC is an oilfield service provider in almost all of the prospective plays, like the Rocky Mountain regions, Appalachian area, Gulf of Mexico and other resources in the United States. The Zacks Consensus Estimate for RES’ next quarter earnings indicates 33.33% growth.

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

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