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Oil Giant Considers Drastic Move As Pandemic Persists

Oil Giant Considers Drastic Move As Pandemic Persists

By Charles Kennedy – Jul 06, 2020, 12:00 PM CDT

Anglo-Dutch oil major Shell is not ruling out the possibility of moving its headquarters to the UK, the group’s chief executive Ben van Beurden told Dutch business newspaper Het Financieele Dagblad in an interview published over the weekend.

The move could offer Shell relief from the Netherlands ‘ dividend tax, which has now become taxing amid the low oil price environment and the pandemic.

Shell is headquartered in The Hague in the Netherlands while it is incorporated in the United Kingdom. It has two classes of shares listed on the London and Amsterdam stock exchanges.

Speaking to Het Financieele Dagblad, Shell’s chief executive declined to explicitly say that the company would consider moving its headquarters to the UK.

“Nothing is permanent and of course we will look at the business climate. But moving your headquarters is not a trivial measure. You cannot think too lightly about that,” van Beurden told the newspaper, as carried by Reuters.

The dual structure is not an acute problem, but it is a “limiting factor” for the company, Shell’s top executive said.

Shell is looking at ways to simplify the dual structure, a spokesman told Reuters, confirming van Beurden’s comments to the Dutch newspaper.

The Netherlands has a dividend tax, against which Shell has been lobbying, seeing it as a hurdle to funding dividend payments, share repurchases, or acquisitions, according to Reuters.

After the plunge in oil prices in Q1, Shell slashed its dividend by 66 percent—a first cut to the company’s dividend since World War II to preserve cash and value in a highly uncertain macroeconomic environment.

Simplifying the dual corporate structure could save Shell costs down the road, as oil companies look at ways to remain relevant to investors and shareholders in the energy transition.

Shell reportedly plans to announce by the end of the year a significant restructuring to reflect its net-zero emissions goal for 2050 and to align itself with a green recovery from the pandemic.

“Our current business plans will not get us to where we need to be, and we will have to change those plans over time. And, it won’t be easy, and of course there will be obstacles to overcome, but like many others, I believe that society now has a unique opportunity to accelerate towards a cleaner energy future,” van Beurden said in a video message last month.

By Charles Kennedy for Oilprice.com

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