Shell Australia CEO Cecile Wake: Living standards under threat

Cecile Wake says commodity exports, tax receipts and government spending underpin the economy and stagnant productivity is a threat to that going forward.

Shell Australia CEO Cecile Wake.

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

Falling productivity is a real threat to our economy and the standard of living enjoyed by Australians for many decades.

Commodity exports, tax receipts and government spending underpin the economy and stagnant productivity is a threat to that going forward. For the energy transition and the economy more broadly, significant and sustained private investment is required. An uncompetitive tax regime, complex regulatory burden and market interventions have clogged the arteries of investment for more than a decade without delivering better outcomes for Australians.

Inflationary pressures are biting in the energy and resources sector with the costs associated with new projects continuing to rise at the same time as non-technical risks are also increasing.

Even with CPI starting to trend down, it’s clear that cost of living pressures are pulling on real wages and Australians are feeling the pinch. While headline inflation is now within the RBA’s target range, in part due to subsidies and rebates, the January CPI data will be key to whether we’ll see an interest rate cut in the first half of the year.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

Australia has tremendous potential to thrive in the journey to net zero – we have abundant natural and renewable resources, the technical skill and capability and proximity to regional markets that rely heavily on our energy today, and into the future, as decarbonisation picks up pace.

Today more than ever, energy security equates to national security. Energy is Australia’s competitive advantage. But to fully realise that potential, we need a harmonised and stable regulatory framework across all levels of government that facilitates successful investment while delivering strong environmental protections and tangible benefits for communities.

Shell is one of Australia’s largest investors, combining global capital with local expertise. We intend to invest in areas where we have competitive advantages and can have the biggest impact on the energy transition. Here in Australia, Shell has a vibrant pipeline of projects in gas, power, firming and renewables, but constantly shifting energy policy and an overly complex regulatory environment makes it harder to attract capital within our global portfolio.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Access to reliable, secure and affordable energy is fundamental to productivity, growth and national prosperity. And, of course, that energy must be increasingly lower carbon and increasingly electrified. However, in our shared pursuit of a net zero economy by 2050, we need to ensure that we don’t pull down the energy system of today faster than we can build the energy system of tomorrow – if we get this right, we set up Australia for a prosperous, competitive and sustainable future.

A harmonised, whole-of-government approach to energy security and the energy transition in its broadest sense, that is focused on delivering the lowest cost, most reliable energy that meets our emissions reduction targets for Australians and our regional trade partners is the biggest lever that we have to lift Australia’s competitiveness. Government should not be picking winners or indeed ruling out energy vectors and solutions on the basis of ideology, because we will need every option available to reach net zero.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

We certainly welcome the support that we’re hearing for gas as it will be central to energy security and emissions reduction as the world moves towards net zero. All eyes will be on the Paris Agreement and how it plays out – having said that, it is an agreement between close to 200 countries and at the recent COP29, we were pleased to see continued support towards more methane abatement, Article 6, and the new climate finance target of at least $US300bn per year to support developing countries – many of which are Australia’s key trade partners.

The most important thing is that we have consistency of policy and stability because whether you’re investing in new energies or gas to back it up, the timeframes are over decades, not the political cycle.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

Flexible working remains an important part of our value proposition for those who can work flexibly. Our Australian workforce has a very high percentage of remote site-based employees who work rosters and have other value propositions.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

AI is not a recent innovation, but it is now more widely available than ever before thanks to an ever-growing tech ecosystem, making it possible to leverage at an unprecedented scale.

At Shell, we have been using AI for many years to help us make better, more accurate decisions in our day-to-day operations and reduce emissions. In our Queensland upstream operations, around 90 per cent of routine actions taken by our production engineers are automated to improve reliability and optimise more than 3,200 wells and connected assets across a 15,000km² footprint. We use predictive models and remote surveillance to anticipate failures in surface equipment, which helps us to flare and vent less, and also materially reduce driver hours, vastly improving our safety risk and general impact.

With the generative AI now generally available, we continue to leverage it to boost the productivity of our workforce. We have been working to develop generative AI based analytics models that help cut down the time it takes to diagnose root causes from 30 minutes to under five minutes, freeing our engineers to focus on more critical tasks.

At our LNG plants, we use AI to analyse data from sensors to determine the most efficient settings for equipment, which helps to reduce CO2 emissions. At QCLNG, our Shell-operated LNG plant near Gladstone, this has reduced our CO2 emissions by more than 60,000 tonnes a year – equivalent to the annual emissions of more than 32,000 cars.