Page 12 - GLNG Week 43 2022

GLNG EUROPE GLNG

Shell sees Q3 profit sink

RESULTS UK major Shell reported earnings for the third reduced according to investments made in UK
quarter that were below those of the previous oil and gas supply.
three months, but nevertheless announced it Production averaged 1.7mn barrels of oil
would expand its dividend and initiate another equivalent per day, down from 1.9mn boepd in
$4bn buyback plan. the previous quarter, as a result of Shell derec-
The company achieved $11.4bn in pre-tax ognising the Salym oil development in Russia
profits for the period, compared with $26bn in and other deferrals. Shell announced its inten-
the second quarter. But the result will not tarnish tion to exit the project, which it jointly operates
what has been a brilliant financial year for Shell, with Gazprom Neft, after the war broke out in
which has seen revenues so far in 2022 reach Ukraine in late February. It withdrew from man-
$285bn, with over $48bn in profits. agement of the company in July.
Shell attributed the dip in earnings in the Weak refining margins struck Shell’s chemi-
third quarter to lower LNG trading and optimi- cals and products business, with income sinking
sation numbers, as well as weaker chemical and from $2.1bn to $980mn. There has been a recov-
refining margins and higher operating costs. ery in global product supply, increased feedstock
These factors were partially offset by increased and utility costs and higher operating costs, Shell
volumes of high-value barrels from deepwater said. While global crude oil prices remain high,
projects. there has been some regulation in Europe and
Meanwhile, the buyback push continues, elsewhere to curb the price of motor fuels, which
with some $6.8bn distributed in the third quar- has been another factor.
ter alone and a further $4bn announced to be Renewables took a significant hit, with losses
carried out by the end of the year. Pending board expanding from $173mn in the second quarter
approval, the company said it would raise the to more than $4bn in the third. The company
dividend per share by an anticipated 15% for the attributed this to lower trading and optimisation
fourth quarter, which will be dealt out in March results for its gas and power division because of
2023. price volatility across North America, Europe
Breaking it down by segment, the company’s and Australia, as well as higher operating
lower trading volumes and higher prices resulted expenses. Renewables performance has gener-
in a $1bn drop in revenue for the integrated ally been weak in recent months, with wind tur-
gas business. Shell also attributed the slump to bines in particular producing less power, driving
“seasonality and supply constraints, coupled up cost.
with substantial differences between paper and The latest financial results are the last to
physical realisations in a volatile and dislocated be presided over by outgoing CEO Ben van
market.” Beurden, who is due to be replaced by Shell vet-
The company’s production was down 2% eran Wael Sawan at the beginning of next year.
quarter on quarter, which the company said was Van Beurden said the company had managed to
the result of industrial action at its Prelude LNG achieve “robust results at a time of ongoing vola-
export plant off the coast of Australia. tility in global energy markets.”
Upstream income was also down compared “We continue to strengthen Shell’s portfolio
with the previous three months, but was still through disciplined investment and transform
much higher than in the third quarter of last the company for a low-carbon future,” he said.
year, coming in at $5.3bn. Shell blamed the quar- “At the same time, we are working closely with
terly drop on the UK’s Energy Profits Levy – a governments and customers to address their
windfall tax that was imposed by Prime Minis- short- and long-term energy needs.”
ter Boris Johnson’s government that resulted in Moving forward, Shell said it would continue
Shell booking $361mn in charges for the three with “disciplined cash capex,” forecasting a range
months. But Shell noted that it was not liable for of $23-27bn for the full year, split evenly among
extra North Sea tax fees because of its heavy cap- its different divisions.™
ital investment in the region. The windfall tax is

P12 www. NEWSBASE .com Week 43 27•October•2022