Shell Hits Pause on Dutch Biofuels Plant Amid Market Slump

Shell announced a temporary halt to the construction of its biofuels facility in the Netherlands due to weak market conditions. The move aims to control costs and re-evaluate the project’s commercial viability. CEO Wael Sawan is focusing on boosting the company's returns through cost-cutting and optimizing profitable operations.

Shell said on Tuesday it will pause construction work at its biofuels facility in the Netherlands due to weak market conditions, the latest step under CEO Wael Sawan's drive to boost the energy company's returns. It is rare for companies to suspend development of projects underway.

Shell gave the greenlight for the development of the 820,000-ton-a-year plant in September 2021 which was originally planned to start production in 2025. The facility at its chemicals park in Rotterdam was slated to produce sustainable aviation fuel and renewable diesel made from waste.

Shell said that following the decision to temporarily pause construction, "contractor numbers will reduce on site and activity will slow down, helping to control costs and optimise project sequencing." Shell will also consider an impairment for the project.

"Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project," Shell's downstream head Huibert Vigeveno said in a statement. Shell shares have gained over 11% so far this year, buoyed by Sawan's efforts to cut costs and focus the company on its most profitable operations, primarily oil and gas.

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