In Good Company with Nicolai Tangen - Shell CEO: Energy, security, transition, and Leadership

Episode Date: April 24, 2024

Wael Sawan is a Lebanese Canadian business executive who became CEO of Shell in 2023. He shares unique insights into navigating the complex landscape of energy transition, aiming for sustainability while meeting global energy demands. In this episode, Wael also shares his personal story and advice to young people.The production team for this episode includes PLAN-B's Pål Huuse and Niklas Figenschau Johansen. Background research was conducted by Kristian Haga and Isabelle Karlsson, with input from portfolio manager Ståle Lægreid.Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi everybody, and welcome to In Good Company. I'm Nikolaj Tangen, and the CEO of the Norwegian Saoan Wealth Fund. And today we are talking to Wael Saoan, the CEO of Shell. Now, most of us associate Shell with a pit stop on the road, but Shell is an incredible company, exploring, producing, refining, trading, transporting, you know, things in cars, ships, planes, and so on. In fact, I've read that the amount of energy you extract in one day is enough to drive a car back and forth through the moon more than 18,000 times.

We own 3% of the company, accounting for more than 6 billion US dollars. Well, Saban, welcome to this podcast. Thank you very much, Nicola. Now, you are both Lebanese and a Canadian citizen. So tell me, how has this shaped you as a person, you think? Look, I think diversity of thought, diversity of experiences is at the core, I suspect, of how I've grown up. I actually lived only five years in Canada, and I've never lived in Lebanon. Yet, of course, both have had tremendous influence through culture. But what they have done has made me accept the different perspectives that people have in different contexts and to learn from that. And I think most importantly, to build resilience.

The Lebanese, unfortunately, are known for resilience, given the many challenges the country has had. And I think resilience is what we need, in particular in times of change, as we currently have geopolitically in the energy system and beyond. Now, we live in a society now where there is, in many cases, very little resilience. Do you think that background really has given you more resilience? I believe so. I think, unfortunately, one only gets to appreciate what one has when it's taken away from them. And often I always take my kids back to Lebanon to see my father and my wife's parents. And it's when they are in Lebanon that they get

to appreciate some of the luxuries that they enjoy having lived in Europe, in the US, even in other parts of the Middle East. Simple thing, like when they take a lift. When it's in Lebanon, they know not to take the lifts because unfortunately, typically the lift gets stopped because of power cuts. Or they get used to, for example, sometimes the light's going out for an hour or two hours because the generator that has been driving the company, the building's utilities goes down. But they've gotten used to a bit more of that. And I think those small elements of appreciation of what we have, what the energy system of today's world actually can do to be able to deliver the comforts that we all enjoy, we should never take for

granted. It's such a core part of what we all, I think, enjoy in life, or at least the majority of us enjoy in life. But a lot of people still just do not have that access to energy. 700 million people today live without access to electricity. Some two and a half billion in just do not have that access to energy. 700 million people today live without access to electricity. Some two and a half billion in general do not have access to available cooking fuels and the like. So those are some of the elements that I think we shouldn't forget. Now, you have a background as a chemical engineer and you've been at Shell for 26 years and bang, you are the CEO. What are the advantages of having spent so long time in a company before you take over? Look, I think it's important to understand the context of the company,

its history, its present, and the ambitions to go into the future. And it's tougher to do that if you haven't actually gotten to see the company from within. As you rightly say, I am a chemical engineer. That's allowed me, maybe the biggest learning I have from chemical engineering is to understand systems, end-to-end systems, because that's what the energy system is. You need to be able to look not just at one end of it, whether that's the supply side or the demand side. It's the whole integrated value chain from supply through the midstream infrastructure all the way to the demand side and how it all comes together. That plays in technology, that plays in product flows, it plays across the entire patch. And I think chemical engineering is a great field to be able

to learn about that. And having been in Shell for some 26, 27 years now and worked in the upstream, worked in the gas part of the company, worked in the downstream worked in the gas part of the company, worked in the downstream in the retail part of the company, and worked in the renewables part of the company as well. It allows you to start to see how the pieces fit together into a whole. So you've been CEO now for one year. What was the biggest surprise taking over the reins? I think there is something fundamentally different as you grow through the company where, of course, your overall requirement in terms of time spent and the need to be able to understand grow, but suddenly becoming the face of the company, both internally and externally. Of course, I'd appreciate it,

I'd intellectualize, but it's very different when you actually get into that position and you recognize how important every action is, how important every word is, because people are looking at that. How long did Shell groom you for the CEO role? I suspect, I mean, the day that I got onto the executive committee in 2019, of course, created a step change in the profile in the company. But I suspect it was before that. I mean, I had maybe my most defining period was in 2012, when I was given the opportunity to lead our Qatari business. I was in Doha at the time. And I stepped into a role, which if I'm honest with you, Nikolai, I thought to myself, I think they've gotten the wrong guy for this job. This is just too big. And was it too big?

I mean, the first six months, I lost around four or five kilograms because I was just from five in the morning to midnight, just working and working and working. More to be able to get to know the people. We had 1,600 people on site. And before I took over that job, I was running the commercial and new business team of around 20 people. So I had a long way to go. And not just getting to know them by giving speeches, getting to know them by going to understand their business,

to understand their challenges, their dilemmas, and then building trust. And I think that leadership journey gave Shell the opportunity to be able to say, let's see whether this person can be one of the many terrific candidates that one day could lead Shell. And why did they pick you at the end? I think what I brought at this point in time in Shell is we felt our strategy was clear. And my track record of execution was

an important part of, I think, what the board was looking for. So then you're appointed CEO. What advice would you give to people who get into those types of situations? So, I mean, what did you do in the beginning? A very important piece of advice I got early on was, in particular, coming from the company and having spent 26 years in the company. The advice was approach it as if you were an external hire. Don't get too comfortable with what you've grown up in, the paradigms, the sacred cows that you have adopted in your 26, 27 years in the company.

Approach it like an external CEO will. And that was great advice, actually. Just go back and look at the fundamentals. Really look at the comparators and say, where are we actually winning and where are we not? And that allowed me as well to sort of lift myself from, this is the organizational structure we have today. Let's continue with it to, no, let's is the organizational structure we have today. Let's continue with

it to, no, let's challenge that organizational structure. Let's challenge the destination that we're going and make sure that we continue to be absolutely committed to that destination. Let's challenge the way we execute. Let's challenge how we execute as a company as well. All of that was an important piece of coming in, and I would recommend it to anyone. It's just too easy to fall into the lull of this is how it's always been, this is therefore how it always needs to be. So you launched an efficiency program and also started to cut some costs. Tell me about the program. We called it a sprint, a 10-quarter sprint. And the reason we chose 10 quarters is in our industry, you could easily

sort of promise things at five, 10 years, just given the gestation of many of our projects. We didn't feel that we as a new management team could simply ask people to trust us. We needed to be able to show them they can trust us. And therefore, 10 quarters was measurable, was clear, while still giving us enough time to be able to make the changes that we needed to be able to show them they can trust us. And therefore, 10 quarters was measurable, was clear, while still giving us enough time to be able to make the changes that we needed to make. And we tried to simplify the focus for the organization and for everyone outside to say there's a couple of things we're trying to do. More value and less emissions.

So every decision needs to reflect on the impact we can have on either enhancing value or reducing emissions, which should be relatively straightforward. And so what we've done as part of that sprint is we've simplified the top of the house. We had nine executive committee members. We've leveled that down to seven. We had multiple targets. We had over 75 operational, financial, and carbon targets. We've reduced that to eight.

Four financial and and carbon targets. We've reduced that to eight, four financial and four carbon, making it very clear to the organization what it is that we want. We upped the performance cadence speed. We have gone now into biweekly and monthly performance cadences at the top of the house, and that is even more frequent as you go deeper into the organization, allowing us to become much clearer on, do you have the data that you need to be able to understand whether we're making progress? Is that data showing that we are making progress? Where are interventions required? So this is a belts and braces transformation of the company, a company that has a great culture,

but one that needs to be supplemented with these three key elements of performance, discipline, and simplification. You do a lot of different things at Shell. Where are you the number one? There's a few areas that I think we have been able to demonstrate leadership. One is in deep water. We're very pleased with our position and more importantly, in the way we continue to execute new projects, such as in the Gulf of Mexico. We've recently commissioned our Vito project. We're in the process of working up our Whale project, our Sparta project. So that's a real heartland for us, as is Brazil in the context of Deepwater. LNG would be another area that I think we have excelled at.

We are, after Qatar Energy, the largest player in LNG, the single largest in terms of the international oil and gas companies. So that's an area where we do have real strength and an area where we see the world really needing a huge amount of gas and LNG in particular, if we are to decarbonize in the direction we would hope we go. Another area I think we are particularly strong at is trading. We have one of the largest trading and optimization houses in the energy sector anywhere in the world. And maybe the last one I'd mention is our marketing organization. You started off by referencing the brand and the pit stop as you go around. We have 46,000 stations around the world.

Well, I have to say I've eaten hot dogs in many of them. And? Well, they're good, right? Good. That's an important feedback. Now, where are you weak? Where are we weak? I think in certain areas we have tried to play and we have shown ourselves that maybe we're not the best players. One area, for example, is trying to play purely the renewable generation space. We've tried there.

We haven't been able to see that we can be competitive in just the renewable generation part. Why? Because I think this doesn't require the same complex systems. It's a different risk profile. And it doesn't necessarily play to what we bring. And what we typically bring is big project management capability, integration of different parts of a value chain. If you take solar panel installation, it's a relatively basic element. But I'll give you a more specific example in that context. We were looking at energy access in Africa, for example, trying to install solar panels there for folks who don't

have access to it. What ended up happening is we would need, in essence, the vehicle that's transporting the solar panel to be surrounded by two safety vehicles to be able to follow our safety protocols. We needed harnesses by the time the person got to the roof of the house in which he was installing that panel. That's very different than what others would do. And so we were actually dis-synergizing on the cost structure. And so we've said, look, let's not play in that space. Let's play across the integrated value chain and partner in that part of the value chain, the renewable generation, with others.

So does it mean that you think that the integrated energy companies should not be doing solar? No, I think if they're going to do solar, bring in the partners who are excellent at doing solar and decide why you want to play in the solar space. But is there really any synergies between solar and other types of energy? I think the biggest synergy is when you look at the energy system more holistically. What we see at the moment is, take the US, where we are one of the largest players in gas and power. We want to be able to decarbonize our sales of electricity in that market, as well as decarbonize both the gas and the power. What you find right now is you cannot get access to green electrons because there aren't enough of them. So we need to be able to play sufficiently in the green energy space, in the green electron space, develop it. At some point, we can dilute it down

to keep a 20% equity interest, but then take a disproportionately larger amount of the green electrons, which we can put into our system. Many of our B2B customers, whom we serve with lubricants, we serve with gas, we serve with all sorts of energy products, are demanding green electricity. To come to them as the largest energy trader and to say, well, we don't have that, wouldn't be the right approach. And therefore, we're trying to leverage our strength to be able to bring integrated green electrons to the system. Should wind be done by the integrated energy companies? Again, I think playing to one strength. On onshore wind, it's tougher to see what particular we would bring. On the offshore side, there's more logic to be had for the big players,

in particular given our deepwater experience and the more complex element of offshore wind. So what part will Shell actually play in the energy transition? complex element of offshore wind. So what part will Shell actually play in the energy transition? I think the role we play right now is to be a multi-energy player. So we see ourselves continuing to produce lower and lower carbon oil. We see ourselves being the movers of the largest amount of LNG amongst the majors. But then we see ourselves playing across lower carbon solutions, both in terms of lower carbon molecular solutions and, where appropriate, lower carbon green electron solutions.

And what do I mean by that? We see ourselves playing in areas such as, one day, green hydrogen. We are developing the largest green hydrogen facility in Europe at the moment in Rotterdam. We see ourselves playing in the biospace and low carbon fuels. We are the single largest blender of biofuels in the world today. We see ourselves playing in other areas as well, such as, for example, carbon capture and sequestration, which is an area we've been working, including, for example, in Norway in the Northern Lights project. And we see ourselves as being able to offer our customers nature-based solution, for example, carbon credits and the like. So really looking at the holistic system, but focusing on the areas where we have differentiated capabilities and competitive strengths.

Now, you try to develop both electrical vehicles, charging and biofuel. Does it make sense to kind of ride both those horses? tends to kind of ride both those horses? I think it does. I mean, I think at the end of the day, there are two major sectors that we serve today. The transport sector, whether that's passenger vehicles, commercial road transport, aviation or shipping, as well as the industrial sectors.

They both need different things. So for example, passenger vehicles needs EV charging. So while we have been selling traditionally gasoline and diesel, we see a growing pool of demand for EV charging. And so we can actually synergize with our existing retail sites and add the option of EV charging. Whereas biofuels are slightly different. Biofuels, we see much more akin to playing to our customers in the shipping space, in the aviation space with sustainable aviation fuels, and in the commercial road transport space. Yeah. Now, a lot of companies are trying to reposition themselves as integrated renewable companies and so on. And I think what's interesting is that the stock market is rewarding them in different ways,

depending on when they come with various types of announcements. So at some stage it's very good to spend more time on renewables and then companies change tax and say they're going to do less of it and then the share prices go up on it. I mean, how do stock markets shape what you think? I think it's important to listen to shareholders, but ultimately we are also driving a long-term strategy. And I don't think the two are in conflict. What shareholders are saying is, show me that you have investable business models that allow me to continue to see cash flow growth in this company, that allow me to have the appropriate shareholder returns. But that's what they're saying now, but they didn't say that

three, four years ago. I think there was a much broader context. You're absolutely right. Three, four years ago, the narrative, and not just by shareholders, by actually a significant portion of society, more acutely here in Northwest Europe, we heard very, very loud concerns around any oil and gas production. So if we now go back to such a period and you get that same kind of political pressure back, will you change your targets and what you aim for? I don't think you can be a company that's, in essence, the distillation of all the asks of everyone around the world. Because in a world that is particularly polarized today, geopolitically, economically, socially, what we need to do is to be very clear on who we want to be as a company. But that doesn't mean that you do not evolve your strategy depending on where you

see value pools and where you see strengths. We thought we could potentially play in home energy and selling power to homes. That didn't work out for us. So we had to change. We can't simply keep doing the things that are not working for us. But we need to be transparent around that. So the number one thing for me is be very clear with our shareholders what our intent is, give them as much opportunity to be able to measure our progress as we can, and then let them make the choices. I cannot influence the decision of somebody who is simply wanting to bet on oil. That's not the company that Shell is, nor are we a company that's simply going to be an offshore wind company or a solar company. We want to be the investment case through the energy transition, offering multiple energy vectors.

And that's what we think we are the investment case for. And that's what we hope to be able to appeal to our shareholders with. How important is a continuation of the Inflation Reduction Act? I think it's a critical element. And the reason I say that is, one, it creates, allow me to say FOMO, you know, fear of missing out by many others around the world. And you see, actually, the Inflation Reduction Act has inspired a few other acts around the world, for example, the EU Fit for 55 that became stronger and better on the back of the Inflation Reduction Act. But it also is going to be critical to make sure that the implementation of the Inflation

Reduction Act continues as planned. The risk is in what are long investment horizons, that significant change in the fiscal and the regulatory framework could undermine confidence in these investments. Now, the CEO of Saudi Arabian oil companies said recently that it's time to abandon the fantasy of phasing out oil and gas. Is it a fantasy to think we'll phase it out? I think in the coming years, one has to be pragmatic and look at the realities we see. Oil and gas is a critical part of the

energy system. In fact, fossil fuels today are over 80% of the energy system. So what we need to do is to be able to continue to find pathways to reduce the dependence on fossil fuels. But it's going to have to be an informed energy transition that does not take away resources from people that need it. But is it actually a transition? Aren't we just adding one energy source onto the other energy source? We are today. You're right. We are today.

And when do you think oil and gas will start to decline? I think gas has a long way to go. I think for the next, you know, at least through the 2040s, we see a growing role for gas as either a replacement for coal or critically as well as a support as a supplement to renewables because of the intermittency of renewables. Oil products, I think, will continue to grow through this decade, and possibly by as early as the next decade, we could start to see a peaking of oil products demand. But who knows? That's going to depend on demand levels.

What we see right now is there are new sources of energy demand that we hadn't anticipated just a few years ago, like generative AI, like crypto mining. All of that is actually enhancing the demand for energy rather than reducing it. And that's an issue. Ownership dialogue. So we have great dialogue with you guys, and we appreciate that you really engage with us. Now, how do you think about stakeholder engagement when it comes to things like your latest climate package? I think it's absolutely critical to be first and foremost transparent in everything one does. I think we need to be clear what we stand for as a company and then to share it with

our shareholders. I think then dialogue is critical with those who agree with you, of which there are many, and with those who disagree with us, again, of which there are many. So on the day that we announced our energy transition strategy report, which was just three weeks ago, I had time dedicated to engagement with staff across the company, time dedicated to engagement with shareholders, time dedicated to engagements with what we would call climate influencers from around the world, non-governmental organizations who have a very, very strong view on the energy transition. Not necessarily always an aligned view,

but good, important, different views, which I think it's critical for us as a company to be listening to, to be learning from. There's a lot of, increasingly, there's a lot of legal activity in this field. And of course, the big one being

whether individual companies need to share the legal obligations of states in terms of cutting emissions. And you're, the big one being whether individual companies need to share the legal obligations of states in terms of cutting emissions. And you're in the middle of a big lawsuit here. How do you think this will pan out? Because it's quite key to your future, right? Yeah, so I think you touched on a couple of questions there. I think one element of this is what is it that you own as a company?

We are firmly of a belief that we have accountability for our own emissions, what we would typically call scope one and extend it into scope two. Those are the emissions that we produce from our own activities or which come directly into the sites where we produce. We also think there's a responsibility that companies like ours have towards scope three, which is why we adopted scope three targets and ambitions, recognizing we don't have all the levers to be able to influence the scope three numbers, but feeling that if we can lean into that and set some goals there, it'll allow us to work with our customers to shape those products that we are selling. So that's an important element.

So just to explain here, scope three is basically the pollution caused by the oil you sell. It's the emissions of any product we sell to our customer, but the emission is realized when the customer uses the product. So it's not you, but the customers. Correct.

So today, if we sell you gasoline, for example, to fuel your car, when you drive that car, roughly 90% of the emissions are actually generated versus the less than 10% emissions generated in the entire value chain, all the way from producing the oil to delivering it to your car. And so the question is, how do we work with our customers to support them on their decarbonization journey? The example I just gave could be that we set up an EV charging point for our customers at the point that they want

to invest in an EV. Another point could be we offer them a bio blend so that we reduce the emission of their vehicle. We can sell them lubricants that allow us to also reduce the emissions from the use of the vehicle. So there are multiple levers we could potentially apply, but we don't have all the levers of control. Only Nikolai can choose if you want to buy an EV or not. Those are choices that the customers have to make. And so that's how we think about that. Now, when it comes to the lawsuit, I think at the end of the day, the endpoint we're trying to all drive towards is decarbonization and making sure that we urgently act on the worst impacts of climate change, which is happening around us. We experience it today, day in, day out.

Now, the question is, what is the best approach? or is it right to do it much more as elected governments choosing how they want to be able to set those policies for industries to then respond? That's a core point of contention that we have in our lawsuit. It's not right just for Shell to have the obligation without our customers having that same obligation. The second key element is it's not right for a court to actually determine the strategy of the company. That's a question that has to be left to the board. So those are some of the elements that we are discussing in this, or that we are supporting in the lawsuit.

And we hope to have a bit more insights. We're actually through the appeal process over the last week. And we expect to hear back bit more insights. We're actually through the appeal process over the last week. And we expect to hear back towards the end of the year. Irrespective of that, we continue to focus on what we can control, which is the way we run the company and how we actually adhere to some of the key elements that we have committed to doing. But we also have some other activity in this space. So Exxon is suing activist shareholders. You are suing Greenpeace. What is this about? I can talkon is suing activist shareholders, you are suing Greenpeace. What is this about?

Look, I can talk about what we are doing. We fundamentally believe in everyone's right to protest, as long as it is lawful, and as long as it's safe. What happened specifically with Greenpeace, this is not a new lawsuit. This is something that happened in February of 2023. not a new lawsuit. This is something that happened in February of 2023. What happened there was a number of protesters illegally mounted a moving vessel, a 72,000 metric ton moving vessel. The judge said that they were putting their own lives at risk and they were putting our crew's life at risk. I have no problem with anyone wanting to protest whether oil and gas should be taking place in the North Sea. But to do it in the way that it was done could potentially have significantly hurt our people. Moving on to geopolitics, we touched upon that earlier on. Now, what impact do you see the energy transition having on geopolitics? Just what is the interplay between the two now?

having on geopolitics? Just what is the interplay between the two now? It's a heavy interplay. I think at the heart of the energy transition will be the difference between are we going to be a much more globalized world or are we going to become a much more localized, protective, protectionist world? Those will play up. Whether the energy corridors, the trade corridors of energy flow start to move towards allied parties away from what is a free flow of energy. Of course, disruptions that we see today, for example, in the Red Sea and beyond are having their own impact on energy flow. So I think the two are significantly interlinked. Are we moving towards a split world where you have China, Iran, Russia on the one side

and West on the other? Is this going to be more deeply embedded in the world? I think there's definitely an element of what we would call polarization in the overall geopolitical space. And what are the consequences of that? What will it lead to? I think at the end of the day, it's going to lead to a slower energy transition than

would have been desired. The biggest... I'm sorry, why? Well, the biggest enabler of the energy transition today has been the very low cost Chinese products that are coming into the market. You look at the majority of where the energy transition is happening. Over 50% of EVs were sold in China last year. Over 50% of renewable generation was deployed in China. And that's because you have less than $10,000 EVs and your ability to be able to source cheap solar panels is in China. As you move towards the rest of the world, affordability constraints start to kick in.

And therefore, as we see more and more protectionist measures, that's going to have an impact. It will mean, of course, more local production, but it's going to be local production at higher costs that will be more difficult to compete against lower cost energy sources like oil and gas. And that's why I think there's a risk of the geopolitical polarization slowing down the energy transition. It will also mean more and more disruption in the way energy flows. And critically, as we look at a larger role for renewables in the energy sector, intermittency is inevitable. And therefore the volatility in the energy sector

will only increase. And volatility we have seen just in the last few years after the Russian invasion of Ukraine, how that volatility plays and impacts everything from cost of living through to voting patterns and beyond. And that is a concern as we look into the future. Moving on to corporate culture.

So Shell is basically a merger of two companies, Shell, which was an English company, and Royal Dutch. This is all the way back to 1907. So it's been a little while. And then you moved your headquarter to London, where you now live. But there were also talks about you potentially moving it to America, I guess, at the time when you moved. Just what kind of corporate culture do you have now at Shell? How would you define it?

I think it's really difficult to define a culture other than to take it back to the core values that culture espouses. And our values have been clear for a long, long time now. It's all about honesty, integrity, and respect for people. But your question, of course, indeed, reflects all the way back to when we brought the two parts of Shell together. And of course, there's been an evolution of that culture, but we still have that Anglo-Dutch core that we have always had and always enjoyed as a company. Our English and Dutch presence, of course, shapes our history. We had some real challenges,

for example, 2004, our reserves crisis, and how that shaped the company thereafter under the leadership of Jeroen van der Veer at the time. All of those actually, I think, create the culture of today. Shell today, I think, is seen by many as being heavily a technology-based company, innovation-based company. We can sometimes be seen as complex, bureaucratic, which is one of the key elements we're looking to unwind, to simplify the company. All of that, I think, creates unique elements, which we have to start there as we think about where we want to go into the future. And where do you want to go? What part of the corporate culture would you like to change? Look, I think it's about evolving that culture because there's a lot of it that I'd like to keep held together.

think it's about evolving that culture because there's a lot of it that I'd like to keep held together. The camaraderie, the incredible sort of safe place that we have created at the company while making sure that we are able to bring those elements of performance, discipline, simplification. When I came out of, or when I started my university, my MBA in 2001, I remember one statement that was said to me on day one. This was at Harvard. It was in Harvard Business School by the dean. He said, the best leaders are tough-minded, but kind-hearted. Tough-minded, but kind-hearted. I think we have a kind-hearted culture already.

Now we need to be tough-minded about the choices we make as a company to really focus on the things that matter and the areas where we can create the most impact, both on a more value perspective as well as a less emissions perspective. That's, I think, our scope for improvement. How do you go about changing it? I think by being clear... Are you a very empathetic person? I can be incredibly empathetic, but I can also realize that I can lock in in certain areas. That's the danger of being in the ivory tower. And so one of the biggest reprieves for me is getting out there. I take the most energy and I feel the most connected when I'm on the road visiting our teams. It fundamentally changes my mood because

it's so easy to get stuck in meetings, meetings, meetings, and great theoretical discussions. Fundamentally different when you're on the front line, offshore, talking to folks there, connecting, listening to what the challenges are and where the opportunities are. And so I find that that's the biggest energy. And therefore now I've integrated it, not just in terms of visits, but every month I find time to be able to reconnect with people across the organization where my team will look at what are some of the brilliant stories happening in the organization, where I can just pick up the phone and call someone and say, tell me a bit more about this, or thank you for doing what you're doing.

Those areas for me are incredibly important. And that's what creates the DNA of this company. Now, energy companies are very safety conscious, and you have to be, right? But you have to be at the drilling platforms, but it often kind of takes over the whole corporate culture, the whole group, right? So at HQ, in some places, you have to hold the handrail when you go up the stairs because it's less risky, right? You come into the parking lot and you're supposed to park with your back to the wall because you are less tired in the morning.

So it's less risky to park this way, right? So all this kind of stuff is just like really permeating the whole corporate culture. How do you make sure that a big company like Shell continues to be innovative and agile? We're still learning how to do it, if I'm honest with you. We are, by the way, one of the companies that are required to hold the handrail with the key element of that ethos being... Do you hold the handrail? I do hold the handrail. My kids hold the handrail as well now. And why is that? You learn very quickly that you can't ask the frontline to do things that you are not willing to do. And so if you're asking folks who are... But should you be holding the handrail in the

headquarter? Look, I think at the end of the day, the handrail is a proxy for something else. The handrail, holding the handrail is a proxy for how we are united around our commitment to safety. But your question still holds. Sometimes we do things which are in the context of the risk profile there are limited. We don't need to do that thing, right? And the handrail has become more symbolic. But if you have a thousand symbolic elements, you create an incredibly complex organization with everyone going to the lowest common denominator. And so what are we trying to do around it? We've recognized that we need to have different control frameworks for different parts of the company. We have typically had one

shell control framework. We are now adopting what we call shell performance framework that is very unique to the business. If you are in mobility, if you are selling fuel, that's a different risk profile to if you are drilling in deep water. That's a different risk profile to if you are actually selling lubricants. And so what we are trying to do is to build frameworks, risk frameworks that are specific to the risk profile that's there. Understanding what your key risks are, and then liberating the organization. And one of the biggest things I take pride in over the last couple of years, we used to have in our safety environment and asset management set of standards, we have around 1,700 standards. That's what we have. We have challenged ourselves and brought in the experts

to say, you have to go in and really reduce that to make it sharp and efficient. We've reduced that by 70%. That will then allow people to say, what are the must-haves? And then here's a whole bunch of nice-to-haves, but you need to decide whether you are willing to take that on. Now, that's easier said than done, because what we still find is even when we say that, people still default to the old culture of, well, let's just keep them just in case. And so this is also about building confidence in the organization, courage to be able to take on one's own risk and to be able to manage one's risk. This is about really becoming accountable and allowing our people to become empowered.

That doesn't happen in six months. It doesn't happen in two years. This is a journey of multiple years, which we are on. But when you have a bureaucratic organization like that with so many rules, do you manage to attract the right type of people? Do the right type of people would want to work in in an organization like that

we are one of the things we have been blessed with is we have outstanding people and we continue to attract outstanding people how do you get them

how do you get them I think there's a few things one is the Shell brand is very very strong right I know it when I joined Shell there is something

about the Shell brand that captivates the imagination we are we are the number one brand in the energy sector. I think beyond that, our ability to be able to offer careers that span the entire energy system, whether you are in gas or oil, or tomorrow you're selling fuel, retailing, or working in lubricants or in chemicals or in research and technology. All of it is available.

So now while I have applied for a job in Shell, I'm now in the final interview. I'm really very fortunate because I'm going to be interviewed by the big cheese. And here you are. What do you ask me to see whether I'm fit for Shell? I think the number one thing is make sure that this is the right company for you. Are you committed to a future to be able to transform the energy system as this company is trying to do? That's one. Do your values fit with the company? Your ability, everything you've learned is interesting for us. But we will form all the technical capabilities that are required to help you. We will give you the commercial capabilities.

That's not what we're worried about. It's culture fit and its ability to be able to actually influence the direction of where this company goes and making sure that we fit you as much as you fit us. Now, you make people change jobs with frequent intervals. Is it every four years people are supposed to try out a new job? There's no set measure, but four years is not atypical. Right.

So some people will do their job for eight years, nine years, 10 years. We just announced, for example, our head of mobility is moving on having done that job for 10 years. It really depends. But four is not atypical for a rotation. So which I think is really impressive. Just what do you achieve by that? Look, there's pros and cons to it. And that's why it's important to be very specific. The beauty of moving people out every four years is you create opportunities to really learn and to grow and to experience different parts of the company. And because we are a multi-energy company, one of the biggest benefits is allowing people to understand the

different parts of the shell forest so that they can actually connect those parts together as they become more senior in the company. I think it creates excitement for young staff. Our retention rates are amongst the highest in the industry. And so we know we're able to keep staff because they get motivated. But for certain jobs, you need tenure. Particular jobs that are connected, let's say, to external stakeholders, where you need to be in the country and be known to the stakeholders. Certain jobs where corporate history is important, such as, for example, in research and development. So there's different parts which we need to be able to also manage. Moving on to leadership, what is good leadership to you?

I think it starts with having the appetite and the humility to learn. Because I think one of the biggest dangers in this job, as you get become more and more senior, in most jobs, actually, is the conviction that you start to actually know stuff. That is a dangerous space to be. The world around us is moving at an incredibly fast pace. Now, change is hard, but it's also inevitable. And therefore, leaders need to be able to reflect that change both internally and externally. And so to me, the appetite to learn and the awareness to be able to then influence that ecosystem around which you are learning on a regular basis is a critical element of leadership. I think another element is I recognized a few months into my job

that you have a whole bunch of assumptions which underlie every view we have, right? I have 26 years in Shell, that I've learned multiple things, and that forms my own thinking on the energy system and on what are the likely technologies to evolve tomorrow or what will be unlikely to evolve. One has to be careful that those assumptions do not lock one's head in and you become almost combative in saying, no, no, my truth is the only truth. That's one of the issues I see today in many of the discussions I have. It's either my truth or your truth. That's one of the issues I see today in many of the discussions I have. It's either my

truth or your truth. If you could implant a new skill set into your brain, what would it be? I'd love to be able to get a lot more understanding of fusion, nuclear, and where that is going. I don't have a lot of background in that space, So a lot of it is curiosity and I'm learning. AI is another one that I've been spending quite some time on just, you know, reading books. I just read the Mustafa Suleiman's The Coming Wave. It's intriguing because it's, we're at the cusp of something that's going to fundamentally change, not just the energy system, the entire world. So I'd love to learn much faster than I'm currently learning. Don't we all? No, these are very big topics.

Now, how do you get this sense of purpose into your employees? Because intrinsic motivation is the most important driver for satisfaction and happiness and so on. And how do you install that into the company? There's two elements, I think. One is making sure that the purpose of the company is broad enough and noble enough that people can connect to it. But then secondly, recognizing that each of us will have a different purpose. Biggest thing we can do is to have great team leaders, because team leaders actually help

our employees connect both to the company purpose, but even more importantly, help individuals find their own purpose. I've had leaders who have helped me with that, to say, actually, here's where the company wants to go. But put that aside for a minute. What do you want to do? What is driving you? Is it your kids? And what is it about what your kids are driving you towards? What is it that you want to prove to them?

What is it that you want to prove to yourself? And so we spend a lot of time building that cadre of team leadership. And that's the number one metric that we look for every single year when we do our overall Shell People survey results. It's how is the quality of our team leadership and where are interventions required to help those team leaders be better? How do you react when people make mistakes? I think you have to embrace the learning around mistakes, right? I have to say I react much better at work because I'm conditioned to than at home. When my son does something wrong, I'm like, come on, we've talked about this before.

But I know that's wrong. But is there not like a bit of temper in your Lebanese background? Isn't that quite a hot-headed type of? Actually, it's the opposite. Really? When you've gone through a lot, right? through a lot, right? So I've had to sort of evacuate my wife and my son from, you know, raining bombs when in 2006, we were refugees in 1982, when we had to go through the Syrian border.

When you've had those experiences, and somebody upsets you with a financial issue or the like, but life is, there's much bigger things than being worried about a mistake or the like. You thank God every day for what you have and then you sort of say, okay, what can we do? And that's what I like about our company. By and large, when something goes wrong, everyone comes together to be able to actually solve the issue.

And that to me is a big reason why I stayed in the company. I mean, this is a company I joined with the idea. I want to get it on my CV, learn a bit and leave within a year. And 26 years, 27 years later, I'm still around. That's what this company does. How do you relax? I love sports. I'm an avid sportsman. I have three young boys. So I'm having to work harder to be able to continue to compete with them as they grow older. What kind of things do you do?

Play football, soccer. I grew up loving soccer, playing it. We do tennis. We are more and more now into paddle. We do water sports, basketball, whatever we can do. Any sport where we can get the competitive juices at amongst the four boys, we're doing it. Do you have time to read? I do have time to read. I do my daily reading. I do my weekly reading. So, you know, publications and the like.

And then I'll do my sort of books typically when I'm traveling. I go back to my favorite, Khalil Gibran's The Prophet, which whenever I'm going through a phase where I just need to reflect. Why is that your favorite book? It's nice that he comes from a village that's not too far away from where my mother grew up in Lebanon. But more specifically, that book to me was one where it allowed me to sort of move away from self to actually society and my broader role within shaping society. Particularly when I'm reflective, for example, now around my own kids, where in his book he talks about your kids are not your kids, they come through you. And that's very powerful as my son starts to prepare to go to university.

How do you let him go now? You've done what you can. He's his own man now. And you try to support him through that journey. So in those times of reflection, I think that book moves me from what is hardcore numbers engineering back to philosophy and life, which is not a bad idea. numbers engineering back to philosophy and life, which is not a bad idea. And well, what is your best advice to your three sons and all the young people who listen to this podcast generally? My sons are, I think, sick and tired of hearing me say this. It's how to make them the best version of themselves. Every single one of my sons is different, actually. It's shocking

to me and my wife how different they are. So my biggest job is how do I help each one of my sons is different, actually. It's shocking to me and my wife how different they are. So my biggest job is how do I help each one of them be the best version of themselves? I think what's great about what we can do is if you can have people who are truly special at a couple of things, that's absolutely fine. You'll have others who will complement their skills, but make sure that they are special at a few things. And my biggest job is to help them find what those one or two things for each of them is. Well, it seems like you are a very good version of Wells Avan. So a big thanks for being here. Really impressive. Thank you.

Thank you very much, Nikola. Thank you for having me.