Royal Dutch Shell expects to pump out all the fossil fuel reserves listed on its balance sheet, its chief executive said, dismissing concerns that production limits in the wake of the Paris climate accord could hit the energy giant’s valuation.

In an interview with Dutch newspaper Het Financieele Dagblad, Ben van Beurden said the issue of “stranded” reserves – deposits in the ground that cannot be used because of carbon emissions limitations – would have no impact on balance sheets.

“The company is valued on producable reserves that we can produce in the next 12 or 13 years,” he said. “We should certainly be able to produce those under any climate outcome. Even if global temperatures can only rise by 2 degrees.”

The Paris Climate Agreement, which came into force this month, commits almost 200 countries, including China, the United States and the European Union, to limiting temperature increases to 2 degrees and weaning the world economy off fossil fuels.

The Anglo-Dutch energy giant, the world’s third largest by market capitalization, has bet heavily on a lower-carbon future, with investments in wind and renewables capped by the $50 billion acquisition of British Gas in February.

Van Beurden was also skeptical that revaluation of reserves after the climate deal could trigger a financial shock, saying that the oil price’s collapse from $120 to $30 a barrel showed the industry’s ability to weather much larger shocks.

“Each $10 fall costs us $5 billion in cash a year,” he said. “The fact that over the coming few decades we are transitioning, in a more or less ordered way, to a low-carbon society is less draconian than what we’ve seen over the past two years.”

He also told the newspaper that there would be no changes to Shell’s dividend policy, even though pay-outs at the current level outstripped the company’s cash flow. “(Shareholders) want a stable dividend. We must be seen as reliable,” he said.

Even with oil at $47 a barrel, the company could make adequate investments with current dividend levels, he said, adding that only a slight increase in demand could send prices up again, since even at the peak of U.S. shale production, there was only a 2 percent global surplus.

Source: www.reuters.com