India Ceo Series: Shell to balance oil and gas business with accelerated low carbon offerings

Shell will continue to keep its oil business stable in India, look for opportunities to grow in the LNG space, and accelerate its push towards renewables and low-carbon solutions, as it aims to align with the country's policy to ensure both energy security and sustainability, its Country Chair for India told S&P Global Commodity Insights.

In an exclusive interview, Mansi Madan Tripathy, who took over as the Country Chair for India in October 2023, highlighted her vision for growth, saying that Shell's future growth strategy will embrace two key things -- a well-crafted business model to deliver more value with less emissions, and a clear plan to embrace artificial intelligence.

"While oil and gas are going to continue to play their part, a big part of the growth in India's energy mix will be linked to the entire renewables space and that's where we feel that Shell will play an important role in line with our global strategy of delivering more value and less emissions," said Tripathy, who also leads Shell's lubricants business for Asia Pacific.

Shell in India currently has about 350 retail stations, with the bulk of them located in the southern and western states. The company aims to be methodical in growing its retail business in India while continuing to offer an integrated mobility experience including fuels, cafes, convenience stores, EV charging, and lubricants changing facilities, Tripathy said.

Under the base-case scenario of Commodity Insights, India's demand growth for main petroleum products will stay positive annually until 2050, although it will be on the way to reaching the plateau level during the last five years of the forecast period.

"Obviously, mainstream fuels and diesel will be there, as well as premium fuels, but as we go in that journey, we are trying to see how we can integrate LNG at the right juncture," she added.

Tripathy said that the pace at which EVs would take away market share from transport fuels would be slow.

"I think in any scenario, the internal combustion engines will still make up the bulk of the production as well as usage. Cement and steel sectors will still depend on traditional oil to a large extent. But more importantly, the big question is - can those sectors move to gas?" she added.

"In transport, again, the highest consumption as well as emissions are in the heavy vehicles segment, where the EV solution is still elusive," she added.

Downstream and upstream

Commenting on the outlook for lubricants, Tripathy said, "There is hardly any place in the world where the lubricants market is growing at the rate of around 2.1%, the rate at which it is growing in India."

Shell is also keeping a close eye on potential upstream business opportunities in India. "We have been present in the upstream business through our BG acquisition with Panna -Mukta and Tapti oil and gas fields. However, these were end-of-life assets, and we are now carrying out the safe decommissioning of the Tapti unmanned platforms," she added.

"We are also aware that over the last few years, the government has taken steps in terms of policy reforms and fiscal terms towards making upstream a more attractive sector. We are currently assessing the potential of these opportunities in India," she added.

Transition fuels

Shell in 2022 finalized a deal with Actis Solenergi Limited to acquire 100% of Solenergi Power Private Limited for $1.55 billion and with it, the Sprng Energy group of companies.

"This is helping us with renewables in the solar and wind space," Tripathy said.

She said gas would continue to play the role of a transition fuel in India.

"I think the sweet spot for energy transition will be the integrated power play as we feel that gas is going to be a very important transition fuel, while we get into the full renewables space," she said.

She highlighted two segments that could provide opportunities to grow its gas business further.

"One is in the LNG space for heavy transport vehicles, which account for significant emissions. If that can be changed to gas, which is a proven technology right now, that could be a very big pathway for our growth," Tripathy said.

"In the future, gas-based power could be one of the vital pillars that support India's LNG growth because of its ability to provide grid stability and flexibility and cater to peak demand in the summer," she added.

In terms of the future expansion of the LNG regasification plant at Hazira, it would depend on various scenarios --- such as LNG's interplay between domestic gas availability, which could come down by 2027-28, she added.

"As a result, India's reliance on imported LNG would go higher in the future, and we need to be ready for that," she said, adding that Shell catered to about 10% of India's LNG imports in 2023.

Her views echoed forecasts from Commodity Insights, which also expects an increased reliance on imported LNG, as the country might face limited domestic gas production growth beyond 2028.

AI-led growth

Tripathy said that India serves as a key technology and innovation center for the group. She said Shell India's engineers, as part of a global team, had developed a race fuel containing 10% second-generation bioethanol for Scuderia Ferrari to use in its Formula 1 racing cars.

The team uses digital stimulation to predict the combustion behavior and performance of each fuel blend to significantly reduce the development time, and maximize performance and efficiency. The team is now working on a 100% sustainable race fuel, which includes several different sustainable fuel components, to meet the requirements for the 2026 Formula 1 season.

"What is also fascinating to me is the kind of revolution which is happening in AI-based technology, which is helping to grow the business," she said.

"For instance, we have technology teams in India that are looking after our global assets, including our global upstream assets. They are able to predictively call out if there's a risk. We have done a couple of benchmarking based on that feedback," Tripathy added.

As appeared in S&P Global