Shell announced on Tuesday that it will halt construction at its biofuels facility in the Netherlands due to unfavorable market conditions, marking a rare decision to suspend a project already underway, as part of CEO Wael Sawan's strategy to enhance the company's financial returns.
Initially approved in September 2021, the 820,000-ton-a-year plant located at Shell's chemicals park in Rotterdam was expected to commence production of sustainable aviation fuel and renewable diesel from waste by 2025.
In response to the pause in construction, Shell stated, “Contractor numbers will reduce on site and activity will slow down, helping to control costs and optimize project sequencing.” The company also indicated that it will consider potential impairments related to the project.
“This temporary pause in on-site construction will enable us to evaluate the most commercially viable path forward for the project,” commented Huibert Vigeveno, Shell's downstream head, in a statement.
Shell's decision comes amid a broader effort by CEO Wael Sawan to streamline operations and prioritize profitability, particularly in its core oil and gas sectors. Despite the pause in its biofuels project, Shell's shares have seen an increase of over 11% year-to-date.
