Shell’s New Finance Chief to Navigate Exit from Russia, Shift to More Renewables – The Wall Street Journal

Shell PLC’s incoming finance chief will face a host of issues, including writing off the oil giant’s Russian business, defending against an activist investor and allocating capital for a shift toward cleaner energy.

The London-based oil giant on Tuesday promoted Sinead Gorman to chief financial officer, a day after it said it would exit its joint ventures with Russian energy giant Gazprom PJSC.

Shell holds a 27.5% stake in Sakhalin-2, an offshore gas project in Russia that is 50% owned by Gazprom, as well as three other projects in Russia. Shell also said it would end its financing of the Nord Stream 2 natural gas pipeline project, which was recently sanctioned by the U.S. Shell is one of five companies that have each committed to provide financing and guarantees for up to 10% of the total cost of the project, estimated at €9.5 billion, or $10.57 billion.

The company said on Monday it has $3 billion in noncurrent assets in Russia and that exiting joint ventures there will impact the book value of its assets in the country and result in impairment charges. Shell nevertheless reiterated its guidance for its dividend and share buyback program.

Shell in 2021 booked $700 million in adjusted earnings from two of its Russian joint ventures. The company reported adjusted earnings of $19.3 billion last year, boosted by higher oil and gas prices, compared with $4.8 billion in 2020.


Newsletter Sign-up

WSJ | CFO Journal

The Morning Ledger provides daily news and insights on corporate finance from the CFO Journal team.


Ms. Gorman will succeed CFO Jessica Uhl, effective April 1. Ms. Gorman currently serves as executive vice president of finance in Shell’s global upstream business and has held other senior finance roles since joining the company in 1999.

Shell last year consolidated its dual British and Dutch structure to make it easier for investors to value the company. It also moved its headquarters from The Hague to London.

In her new role, Ms. Gorman will have to communicate with traditional oil-and-gas investors and those focused on environmental concerns, said Allen Good, an analyst working for the research arm of ratings firm Morningstar Inc. “As they manage the energy transition and execute on their strategy, getting investor buy-in that what they’re doing is the right thing” will be critical, he said.

Activist investor Third Point LLC in October urged Shell to split into two companies—one focused on refining and other legacy businesses, and the other centered around renewable energy. Shell in response defended its business model, saying its oil-and-gas assets were critical for funding its low-carbon investments.

“She’ll need to defend the integrated business structure,” said Jason Gabelman, an analyst with financial firm Cowen Inc.

Shell also faces legal pressure to go green. A Dutch court last year ruled the company is responsible for climate change and ordered it to cut its emissions. Shell has said it would appeal the ruling, arguing it was unfairly singled out.

Like several of its competitors, Shell has taken steps to reduce its carbon footprint in response to pressure from investors. The company said last year it would lower its oil output and expand in renewable power. It also pledged to cut its carbon-dioxide emissions in half by 2030 from 2016 levels.

Ms. Uhl, an architect of Shell’s plan to simplify its share structure, is leaving after about five years as CFO due to family circumstances preventing her from relocating to the U.K., the company said in a press release. She will assist with the CFO transition through June 30, Shell said. It didn’t respond to requests for comment.

“I look forward to working with her (Ms. Gorman) in the execution of our strategy to accelerate Shell’s transition to a net-zero emissions energy business purposefully and profitably,” Chairman Andrew Mackenzie said in the press release.

Write to Kristin Broughton at Kristin.Broughton@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8