Shell will increase its dividend 15% and boost natural gas production as new Chief Executive Officer Wael Sawan refocuses on the fossil fuels that drove record profits last year.

It’s part of a pivot by the European oil major to expand the most profitable parts of its business, even if they are carbon intensive, while scaling back ventures that don’t make high enough returns. The company reiterated its pledge to achieve net-zero emissions by 2050.

“We will invest in the models that work — those with the highest returns that play to our strengths,” Sawan said in a statement. The CEO and his management team will lay out more details of the plan to shareholders at a presentation in New York later on Wednesday.

As well as the dividend increase, which will take effect this quarter, Shell committed buying back at least $5 billion of shares in the second half. The company will reduce capital spending to $22 billion to $25 billion a year for 2024 and 2025.

Key to achieving higher returns will be the oil and gas business that drives the majority of Shell’s profits. The company will no longer seek to cut oil production by 1% to 2% annually, having achieved its initial output-reduction plan — announced in 2021 amid a focus on cutting carbon emissions — faster than anticipated.

Shell will now seek to grow its integrated gas business and will stabilise oil output to 2030. © Bloomberg