Shell ‘massively undervalued’ in London, says former chief

The former head of Shell has said the oil major is “massively undervalued” in London and may benefit from switching its listing to the US, in another blow to sentiment surrounding the UK stock market.

Ben van Beurden, who oversaw Shell’s move from The Hague to London in 2022 and the removal of its dual-class share structure, said the company’s board had previously decided that a move to the US was “a bridge too far”.

But he told the Financial Times on Tuesday that US-listed oil companies benefited from a deeper pool of capital, higher valuations and “more positive” attitudes from investors.

“All these factors conspire against the [companies] listed in Europe. And I think increasingly that will be a problem . . . Something will have to give,” he said, in his first public interview since leaving Shell. “The company is massively undervalued . . . the share price today is at an all-time high, but it could be significantly higher from where it is today.”

Van Beurden’s comments, at the FT Commodities Summit in Lausanne, will add to fears that London’s most-valuable listed company could eventually leave the UK stock exchange. It comes after the FT revealed last year that the oil major had discussed the merits of moving to the US, before ultimately deciding to consolidate its base and stock market listing in London.

The UK’s equity market has recently been dealt a series of high-profile blows as companies including building materials group CRH and packaging company Smurfit Kappa have opted to shift their primary listings to New York, the latter as part of a merger with US rival WestRock.

Wael Sawan, Shell’s current chief executive, expressed his own concerns about the London stock market in an interview published by Bloomberg on Monday. “I have a location that clearly seems to be undervalued,” he said. Sawan pledged to close the gap by cutting costs but added that if that did not work “we have to look at all options. All options.”

Van Beurden said the valuation discount between European and US-listed companies had “existed for a long time, and it will take a long time, maybe forever, to resolve”.

He also defended his successor’s decision to downgrade some of the company’s energy transition targets this year, saying the world had changed since he set the goals almost a decade ago and Sawan was right to be honest about the company’s progress.

“If you see things that can’t work, you have to adjust your strategies and your targets as well,” he said.

“[Sawan said] it’s an honest approach and I think he is absolutely right. To just waffle and bullshit that this is all happening while it isn’t would not be correct. I completely understand what he did, and I would completely support it.”

He added that when Shell introduced its climate targets in 2016, “we were right at the time, but a lot of things have changed since”.

Van Beurden said he felt in 2016 that the chances of an orderly transition to net zero “were actually pretty high”, but now believed it “very unlikely”, adding that the journey would “definitely” be bumpy and there was a possibility the energy transition would “completely derail”.

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“I think the whole sentiment has changed and therefore we have to recalibrate,” he said.

Van Beurden called his last three years at Shell, marked by the coronavirus crisis and outbreak of war in Ukraine, a “very difficult period to work through”, saying the company made its decision to leave Russia, triggering a $4.2bn writedown, “in the weekend after the invasion”.

Bernard Looney, then chief executive of BP, called him on Sunday night to inform him that BP was leaving, van Beurden said. “In principle, [on] Sunday night, we had decided we should leave as well. And [on] Monday morning we formalised with the board.

“We took all the measures, spoke to governments and announced it close of business on the Monday,” he added.

This article has been amended since publication to clarify the details of Smurfit Kappa and CRH’s listings in New York.