Page 7 - Euroil Week 44 2020

EurOil COMMENTARY EurOil

derivatives. and chemicals business, which lost $88mn,
Both Shell’s integrated gas business and its after making profits of $575mn in Q2 2020 and
upstream operations saw significant slides in $952mn in Q3 2019. Its integrated gas, renewa-
earnings y/y, but its oil products division per- bles and power business also saw weaker num-
formed better, as weak refining and trading bers, generating just $285mn, versus $326mn in
numbers were largely offset by a growth in mar- Q2 2020 and $574mn in Q3 2019.
keting earnings. Total’s marketing and services division man-
Shell pledged to reduce its net debt to $65bn aged a growth in earnings to $461mn, however,
and then shift its focus towards rewarding share- from $129mn in the previous three months and
holders. Its net debt stood at $73.5bn at the end $413mn a year before.
of September. The company announced that The French major gained from a “more
month it would target $2.0-2.5bn in annual favourable environment” in the quarter than
cost savings, in addition to the $3-4bn of cuts it earlier in the year, CEO Patrick Pouyanne said,
announced earlier in the year. pointing to higher oil prices and a recovery in
Shell is planning a radical overhaul of its fuel demand. “However, the environment was
business to meet its net-zero emissions target for mixed, with low natural gas prices and severely
2050. This strategy means that 2019 will likely be depressed refining margins due to excess pro-
the “high point” of its oil production, as it moves duction capacity relative to demand and high
its attention more to gas as well as renewables, inventories.”
hydrogen and electricity. It also aims to scale Production came to 2.72mn boepd in the
back its oil refining from 14 sites to six “energy quarter, falling 10% y/y as a result of OPEC+
and chemical parks.” quotas, cutbacks in Canada and disruptions in
Libya. Oil output was hardest hit, sliding 17%,
Total while gas extraction was down by only 5%.
France’s Total also saw a rebound to the black in Total is aiming to double its LNG sales over
the quarter, reporting $202mn in profits com- the next decade to 70mn tpy. Its sales of the
pared with a $8.4bn loss in Q2 2020 and $2.8bn super-cooled fuel were up 9% y/y in the third
income in Q3 2019. quarter at 8.1mn tonnes, on the back of increased
Like others, Total’s quarter-on-quarter trading activity.
improvement was chiefly thanks to the lack of Rising oil prices will lead to a growth in Total’s
sizeable impairment charges. Its earnings came LNG sales price in the fourth quarter, the com-
under pressure from low gas prices, weak refin- pany said, forecasting it would climb to over $4
ing margins and reductions in output. per mmBtu, from $3.57 per mmBtu in Q3 2020
The worst performer was Total’s refining and $5.9 in Q3 2019. ™

Total, which has big
expansion plans in
LNG, is forecasting a
recovery in prices in the
fourth quarter.

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