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Shell considering selling UK energy supply business

The Telegraph

Shell considering selling UK energy supply business

Shell is considering selling its UK energy supply business after injecting £1.2bn into the loss-making division to help it cope with rocketing gas and electricity prices.

The company on Thursday said it had launched a strategic review of the business, which supplies 1.4m British households and also operates in the Netherlands and Germany.

It raises the prospect of the unit being sold just six years after Shell first moved into the UK household supply sector.

A spokesman stressed that no decisions had been made and that Shell’s priority was to “ensure our customers in those countries continue to receive a reliable and affordable energy supply” while helping those who are struggling with bills.

The company first entered the UK home supply market in 2017 when it acquired energy and broadband provider First Utility and the firm’s 825,000 customers.

Since then it has expanded its footprint with the acquisition of Green Star Energy and the Post Office’s energy business, as well as agreements to take on some customers whose suppliers collapsed in the face of rising prices that have convulsed the industry for the past year and a half.

Shell provided £1.2bn in cash and credit to the subsidiary last year to help it weather the extreme volatility, with the division posting an annual loss of £112m.

The cash injection hardly dented Shell’s profits, which surged to a record $30bn (£24bn) in the first nine months of 2022.

Shell also operates home energy supply businesses in the US and Australia but these are not being reviewed.

The company said the process was expected to take “a number of months” but did not give a target finish date.

On Thursday a Shell spokesman said: “The review is in line with our Powering Progress strategy, which includes continually exploring options to maximise the value of our portfolio and address performance in tough market conditions.

“No decisions have yet been taken on the way forward and our priority remains to ensure our customers in those countries continue to receive a reliable and affordable energy supply, and to provide support for customers who are struggling with the cost of energy and wider cost of living pressures.

“We remain committed to our integrated business model that produces, buys, trades, transports and sells energy around the world.

“Our wholesale and [business-to-business] energy supply businesses are out of scope for this strategic review, as are our home energy supply businesses in the USA and Australia.”

The UK’s retail energy supply sector has been battered since the summer of 2021, as gas and electricity prices were spurred higher by both the reopening of economies following the pandemic and then growing tensions between Russia, Ukraine and Kyiv’s western allies.

Significant spikes in gas prices following Vladimir Putin’s invasion of Ukraine in February 2022 then sent shockwaves across the globe, driving up inflation to levels not seen for decades in many countries.

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