The LPG business remained resilient in 2023 within a year of challenging global conditions – higher inflation, rising interest rates, FX volatility, and stretched labor markets. The divergent demand drivers for energy across regions also translated into varying LPG volumes, leading to increased volumes in Brazil, India, Ireland, and pressure in France and USA. Throughout the year, volatility remained present as the cost of gas stayed high. Besides the complex geopolitical environment and warmer weather, the energy transition remains one of the most important external drivers for SHV Energy. Whilst the EU continues to be the frontrunner for global climate action, policymakers seem to be taking a more balanced view between sustainability, energy security, and affordability. As such, customer behavior continues to evolve, as higher awareness of energy costs and a sense of urgency for the energy transition become more relevant, although regional differences remain substantial.
SHV Energy’s strategy remains focused on ‘Advancing Energy Together’ in order to provide customers with cleaner and more affordable energy alternatives over time. Three pillars will drive the change: (1) focus on improving the performance and optimising the composition of the LPG portfolio; (2) expanding sustainable fuels with innovative molecules and biofuels to provide cleaner alternatives to customers, while leveraging existing infrastructure; and (3) growing the renewable business with solar and energy efficiency solutions, also facilitating the energy transition for SHV Energy’s customer base.
In 2023, SHV Energy calibrated its strategy in order to reach the full potential of its LPG portfolio. A more tailored approach was implemented, clustering countries into different operating models based on their specific market characteristics and potential. This led to over 700 initiatives mapped, prioritising cash generation, capex allocation, operational excellence, sustainable growth, amongst others. Furthermore, the current portfolio is continuously being reassessed, potentially leading to exits in certain markets or entries into new countries. In 2023, this translated into the successful sale of the operations in China and the full integration of Bangladesh’s Petromax. Additionally, investments in key infrastructure are enabling the business to perform more efficiently, including the Tuticorin terminal in India becoming fully operational and Karlshamn’s terminal in Sweden utilising the increased throughput.
Following SHV Energy’s long-term ambition to provide cleaner alternatives to customers, sustainable fuels gained momentum in 2023. To accelerate progress, a new business unit was created under the name of ‘Futuria Fuels’ as an umbrella for all non-fossil transition fuel initiatives. Dimeta, the joint venture with UGI, shows potential as the first-of-its-kind demo plant is in the final test stage to produce rDME, a clean-burning fuel produced from recycled carbon feedstock. In parallel, bioLPG continues to readily provide cleaner solutions in select countries, while alternative pathways are being pursued within an extensive R&D portfolio to increase availability of sustainable fuels in the coming years.
Over the course of the year, renewable solutions have also been strengthened by leveraging learnings to enable a solid platform for future growth. The remaining shares of SunSource, a solar generation company in India, were fully acquired and, with this, a new accelerated growth plan was presented with significant investments expected to achieve the next level of growth in solar solutions for industrial customers. Additionally, EM3, the energy efficiency company in Ireland, continues to grow as planned focusing on improved energy efficiency for businesses across Europe.
The changes that are being implemented also require new capabilities and enablers. As such, SHV Energy continues to promote an inclusive culture and is investing in developing core capabilities within the organisation to be better prepared to drive growth within the energy transition. Digital and data insights are now closer to the business, driving customer, operational, and commercial innovation & excellence – from filling plant automation and new ERP systems to zero-waste innovations. Additionally, to guarantee a safer working environment, health & safety standards are continuously being improved whilst cybersecurity readiness is a top priority for the organisation. Overall, SHV Energy remains well positioned to continue building upon this year’s strong results and to deliver long-term value in the energy sector – for the people, planet, and to the business.
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