MOSCOW (MRC) -- Royal Dutch Shell on Monday said it will write down the value of oil and gas assets by USD3.5 billion to USD4.5 billion following a string of impairments this year as it adjusts to a weaker outlook, said Reuters.
In an update ahead of its fourth quarter results on February 4, Shell said the post-tax charge was due in part to impairments on its Appomattox field in the U.S. Gulf of Mexico, the closure of refineries and liquefied natural gas (LNG) contracts.
It said some charges involved in its restructuring would be recognised in 2021. Shell shares were down by around 4% in early trading in London. In October, Shell, the world's biggest LNG trader, wrote down the value of its LNG portfolio by just under USD1 billion, focusing on its flagship Prelude project in Australia.
That followed a USD16.8 billion writedown in the second quarter which also included Prelude and a sharp cut in its price outlook. CEO Ben van Beurden on Feb. 11 will unveil Shell's long-term strategy to sharply reduce its greenhouse gas emissions and expand its low-carbon energy and power businesses.
In its update, the Anglo-Dutch company also said it expects oil and gas production in its upstream division to be around 2.275 to 2.350 million barrels of oil equivalent per day, slightly higher than in the third quarter. Production was impacted by the closure of platforms in the Gulf of Mexico due to hurricanes as well as mild weather in Northern Europe. LNG liquefaction volumes are expected to be between 8 and 8.6 million tonnes.
Oil refinery utilisation is expected to be between 72% and 76% of capacity in the quarter, reflecting continued weak demand due to the coronavirus pandemic. Shell, the world's largest retailer, said its fuel sales were expected to be in a range of 4 to 5 million barrels per day, roughly similar to the third quarter.
Record profits from its marketing business, which includes over 45,000 petrol stations, strongly boosted Shell's third-quarter results. The company said, however, that its fourth-quarter marketing results were expected to be "significantly lower" than the previous quarter. Oil and gas trading profits were also set to decline sharply in the fourth quarter from the third quarter, it said.
As MRC informed previously, Royal Dutch Shell plc. said in November that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC"s ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC