Thursday

20th Jan 2022

'Royal Dutch Shell' to ditch Netherlands for UK

  • The outgoing Dutch minister for economic affairs and climate policy Stef Blok said: 'We are unpleasantly surprised by this. The cabinet deeply regrets this intention' (Photo: Municipal Archives of Trondheim)
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The oil and gas giant Royal Dutch Shell, more commonly known as Shell, announced on Monday (15 November) it wants to become fully British, ending a 114-year relationship with the Netherlands.

If the new plan is implemented, the company will move its tax residency to the United Kingdom, and end its dual share-structure. It will also have to drop the "Royal Dutch" from its name.

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The Dutch outgoing cabinet was informed of the plan on Sunday.

"We are unpleasantly surprised by this. The cabinet deeply regrets this intention," outgoing minister for economic affairs and climate policy Stef Blok told press.

"We are in talks with Shell management about the consequences of this proposal for jobs, crucial investment decisions and sustainability. These are extremely important," Blok said.

CEO Ben van Beurden said Shell will remain "strongly connected" with the Netherlands. "I realise very well that the announcement today is a difficult message for many people."

Van Beurden said the move is necessary to simplify the oil and gas giant, currently part-based in The Hague. The single share structure will make stock buybacks easier, and he said the move would also accelerate the move to clean energy.

Shell's shares climbed more than two percent in London early on Monday after the news.

"We see merits in the proposed restructuring of Shell's shares structure and tax residence. Among other benefits, the proposed changes will increase Shell's ability to buy back shares," investment banking group Jefferies said.

However, it is unclear how accelerated share buybacks will help the company 'green' its business.

Shareholder payouts

Rodrigo Fernandez, political economist and researcher at Centre for Research on Multinational Corporations (SOMO) tweeted on Monday that the "monomaniacal focus on the value of shares that in the long-term destroys shareholder value."

Shell has "exploited the company and borrowed money - not to invest in activities that will pay off in the long run, but to give it to the shareholder."

Increased dividends and share buybacks will cause share prices to go up, increasing the companies strength, which improves easy access to capital markets, shareholder thinking goes.

"It is a top priority," to increase dividends, van Beurden told shareholders in February, following an annual loss of almost €22bn for 2020.

But a report published in March SOMO showed that Shell paid out €160bn to its shareholders and also spent €46bn on share-buybacks between 2000 and 2019 - a close second to Exxon, while Shell has "accumulated more debt than any other company in the sector."

This money could have been spent on renewables, SOMO concluded, "making its capital stock more climate-proof"- and thus improving its long-term outlook.

Climate lawsuits

In May, a court in The Hague ruled Shell must reduce its emissions. It also held the company responsible for the carbon footprint of its customers.

Shell chair Andrew MacKenzie said the restructuring would have "no impact" on the legal proceedings.

"Shell is rising to meet the court's challenge and has recently announced a new absolute emissions-reduction target."

Shareholders will vote on the move at a general meeting on 10 December.

Dutch government's attempt to keep Shell fails

A last-minute attempt by the Dutch government to scrap the country's dividend tax and keep Royal Dutch Shell in the Netherlands failed. The UK is the one of a few countries in Europe that does not levy a dividend tax.

Analysis

Hydrogen - the 'no-lose bet' for fossil-fuel industry?

The EU plans to label natural gas as 'green' in sustainable investment rules. From 2026 it will have to be blended with low-carbon gases like green hydrogen - but many scientists warn this is inefficient, costly and damaging to health.

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