Shell to target convenience stores as means to boost downstream revenues
Rise of the electric car is forcing oil giants to re-align their business models moving forwards.
Oil supermajor Royal Dutch Shell is to focus on petrol stations and convenience stores in diverse markets including China, India and Mexico as it seeks to bolster profits in the midst of the growing impact of electric vehicles, reported Reuters citing a statement from the company.
By 2025, the firm intends to boost its network of roadside stations by nearly 25% to 55,000, eyeing 40mn daily customers, Shell said in a statement on Wednesday.
It will add a further 5,000 convenience stores selling products such as coffee and snacks, with growth prioritised on developing economies in emerging markets.
Shell, in addition to other “Big Oil” operators such as BP, believe retail can be a channel to secure demand for the fuels it refines, as consumption could reach a peak within ten years due to the growth in electric vehicles.
“We plan to be leading through the energy transition,” Shell head of downstream John Abbott said in an investor presentation on Wednesday cited by the news agency.
Shell anticipates earnings from its marketing and commercial businesses to increase year-on-year by 7% into 2025, when it should achieve $4bn in earnings.
The company is also to launch various initiatives including electric battery chargers and hydrogen chargers to its petrol stations, hoping to snare some business from the growth in the non-combustion engine segment.
The Anglo-Dutch company said its downstream business, which includes refining, trading, marketing and chemicals, will produce $6-$7bn organic free cash flow per year by 2020 based on a Brent crude oil price of around $60 a barrel.