Wael Sawan, Shell lifer taking helm to steer through energy transition

When Wael Sawan takes the helm at Shell in January, the new chief executive will inherit a company in rude financial health but still facing existential questions about its future.

Since 2014, outgoing boss Ben van Beurden has steered the company through two oil price crashes, strengthened its balance sheet, relocated the headquarters to London and pledged to slash emissions by gradually shifting from hydrocarbons to cleaner forms of energy.

Shell has stressed that 48-year-old Sawan, who joined the executive committee in 2019, was closely involved in the development of that strategy and will focus on delivering rather than overhauling van Beurden’s plan. “Ben’s legacy will frame Shell’s success for decades to come,” chair Sir Andrew MacKenzie said when announcing the appointment on Thursday.

Yet in naming Sawan, a dual Lebanese-Canadian national born in Beirut, bankers and former colleagues said Shell had selected someone steeped in the company’s culture but independent-minded enough to make changes if required.

“I think you’re going to see a level of ruthlessness with Wael that we’ve not seen before with Ben, and I think that’s going to be a good thing,” said one former Shell colleague who worked with Sawan for more than 20 years.

Sawan is a Shell lifer, having joined the company shortly after graduating and, barring a two-year stint at Harvard Business School, working there ever since.

But unlike the series of western European men that has preceded him as chief executive, he grew up in the United Arab Emirates before attending university in Canada to study chemical engineering.

“It is a big step that someone from the rest of the world is getting the top job,” said one former colleague. “That in itself is an important milestone.”

In his 25 years at Shell, Sawan has worked all over the world but made his name in Qatar running the company’s liquefied natural gas projects from 2012 to 2015 in what has arguably become Shell’s most important producing market.

During an earlier stint in Qatar he worked for Andy Brown, a former Shell executive who went on to become its director of upstream business, which includes exploration and production, before leaving in 2019 and later heading Portuguese energy group Galp.

“Wael’s a great leader,” said Brown, who has been close to Sawan since 1999. “He is empowering but he’s also decisive and I think that will be a great combination of ingredients to take Shell on to the next level. I do think he’s the right man for the job at this particular moment.”

After Qatar, Sawan was sent to New Orleans where he ran Shell’s deepwater oil and gas business and is credited with transforming the division’s financial performance with a sharp focus on capital discipline.

Other former colleagues also commented on what they described as a willingness to take difficult decisions. “He’s someone who absorbs information, is quiet and considered, forms his own view and isn’t afraid to take action,” said one.

While Shell is generating record profits — $11.5bn in the last quarter — challenging decisions lie ahead. In 2020 Shell was the first of the supermajors to commit to reduce greenhouse gas emissions to net zero by 2050 but has since struggled to retain talent in the low-carbon businesses that are central to its transition strategy.

Elisabeth Brinton, head of the renewables and energy solutions division, left Shell in February after three years at the company. Senior green energy appointments from investment bank Macquarie and solar group Lightsource BP have also arrived and left in the past two years.

Last year Shell was ordered by a court in the Netherlands to slash its emissions faster, and although it has agreed to implement most of the judge’s ruling, it has appealed against the decision.

Sawan has less experience in clean energy than in other parts of the company, having only run the gas and renewables division since October. But former colleagues from that part of the business said that should not be an obstacle to success. “He’s got the intellectual capacity to think through and know what needs to happen,” said one.

When Bernard Looney took over as chief executive of BP in 2020, his appointment was followed by one of the most ambitious overhauls of corporate strategy in the sector, as the Irish executive pledged to cut oil production by 40 per cent by 2030 and fast-track the development of 50 gigawatts of renewable power.

With Shell already having launched its transition strategy, Sawan was very unlikely to attempt anything close to that level of change, analysts said.

“I think he sings from same hymn book as we’ve been hearing from the higher echelons of Shell for a number of years, which is a focus on decarbonising the customer,” said Oswald Clint, a Bernstein analyst who has followed Shell since 2004.

Still, while it was hard to make “supertankers” such as Shell change direction, Clint said Sawan could bring new energy to the strategy.

“He’s younger, more energetic, ready to go, so you are slotting in someone who is just really up for the challenge of capitalising on what I see is a huge opportunity” for Shell to lead the energy transition, he said.

One top 10 active shareholder stressed that investors should not “make too much” of the succession. “There’s not going to be a lot of change internally. Van Beurden set things up not for the next two to three years but for the next 10 to 15.”

Some changes, however, will be required, including appointing someone to replace Sawan as director for integrated gas, renewables and energy solutions.

One former colleague said Sawan had favoured small leadership teams in previous roles. Chief financial officer Sinead Gormam and upstream director Zoe Yujnovich, both of whom have worked closely with him, were likely to be central to the incoming chief executive’s future plans, the person added.

Sawan on Thursday said he looked forward to channelling Shell’s “pioneering spirit” to “grasp the opportunities” presented by the energy transition.

Van Beurden will leave him with the financial firepower to do that. Execution will be the difficult part.

Additional reporting by Adrienne Klasa

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