Energy giant Shell has announced its withdrawal from the Chinese electricity market as part of its ongoing efforts to realign investment priorities for improved profitability.
According to a report by Bloomberg, Shell stated in a press release that it made the decision to exit the Chinese electricity value chain, which includes power generation, trading, and marketing businesses, by the end of last year.
“We have selectively invested in electricity, focusing on creating value from our power portfolio, which necessitates making tough choices,” the statement read.
Shell’s website states that Shell Energy China was one of the first wholly foreign-owned enterprises to participate in China’s carbon emission market and registered trades in the Chinese electricity market.
“We will work together with partners and customers to contribute to China’s energy transition,” Shell expressed.
As of 10:50 GMT on Wednesday, Shell’s stock price had dropped by 0.8%, while the overall European energy index fell by 0.23%.
Shell CEO Wael Sawan is actively pursuing higher-profit businesses, including natural gas and oil operations.
During last year’s Capital Markets Day, Sawan expressed his priority to consider returning funds to shareholders and make more selective choices regarding the projects the company engages in.
Last month, CFO Sinead Gorman stated that Shell is strategically positioning itself as a comprehensive electricity provider in markets and regions where the business environment is favorable and the company can engage in the entire value chain.
“In regions such as Australia, the United States, Europe, and India, our goal is to maximize value through investments in renewable energy generation, battery storage, and leveraging trading and optimization capabilities,” she said.
The company is also reviewing its mega-refining and petrochemical joint venture in Singapore.
Simultaneously, Shell is undergoing company-wide layoffs, including staff in the low-carbon solutions division.
While reducing its investments in renewable and low-carbon energy businesses, Shell plans to double down on investments in natural gas, anticipating continued growth in natural gas demand over the coming decades.
As part of a broader review of its investment portfolio, Shell sold assets such as its retail electricity businesses in the UK and Germany last year.
To save up to $3 billion in annual costs, Shell has exited European retail electricity businesses and several offshore wind and low-carbon projects over the past few months.