MOSCOW (MRC) -- Shell’s chemicals business has reported strong fourth-quarter earnings of USD367 million on a current cost of supply (CCS) basis, swinging from a loss of USD78 million in the prior-year period, reflecting “higher realized margins in base chemicals and intermediates from a stronger price environment,” reported Chemweek with reference to the company's statement.
The earnings are also substantially higher sequentially on the company’s third-quarter segment earnings of USD131 million.
Adjusted chemicals earnings of USD381 million also swung from a loss of USD65 million a year earlier, and were up 167% sequentially. Shell’s fourth-quarter adjusted earnings were boosted by a year-on-year (YOY) increase in base chemicals margins of USD129 million, while intermediate margins rose by USD128 million YOY, it says. Higher base and intermediate chemicals margins were seen across most product segments, along with higher joint venture chemicals income due to improved margins and demand in Asia, it says.
For the first quarter of 2021, Shell is forecasting chemicals sales volumes of 3.6-3.9 million metric tons, with an average manufacturing plant utilization rate of 80–88%. The average plant utilization rate in the fourth quarter was 79%, up from 71% in the prior-year period, due mainly to improved site availability, it says.
Full fiscal year 2020 chemical earnings on a CCS basis rose 69% YOY to $808 million, boosted by the fourth quarter’s higher realized margins from the stronger price environment, partly offset by lower sales volumes due to the COVID-19 pandemic compared with the previous year, Shell says. Adjusted full-year chemicals income of $962 million was up 30% YOY. Average chemicals manufacturing plant utilization for the year was 80%, up from 76% in the prior year, due mainly to higher maintenance activities in Asia and Europe in 2019, in addition to strike actions in the Netherlands that year, it says.
Chemical segment capital expenditure (capex) in the fourth quarter totaled USD830 million, down from USD1.02 billion a year earlier but up USD235 million on the third quarter’s total. Full-year 2020 chemicals capex totaled USD2.64 billion, down from USD4.09 billion in 2019.
Shell reported a group loss of USD4.47 billion for the fourth quarter on a CCS basis, swinging from a profit of USD871 million a year earlier, while its full-year earnings swung to a loss of USD19.92 billion from income of USD15.27 billion in 2019. The loss was due mainly to negative earnings in its upstream, oil products, refining, and corporate segments, caused primarily by lower oil prices, production volumes, demand, and refining margins, as well as previously announced impairment charges. Adjusted fourth-quarter group earnings were $393 million, down 87% from USD2.93 billion in 2019, while adjusted full-year income was USD4.85 billion, down 71% YOY from USD16.46 billion.
Group capex for the full year was cut to USD18.0 billion from USD24.0 billion in 2019, coming in USD2.0 billion under its previously stated goal for 2020 of USD20.0 billion. Operational expenditure totaled USD33.0 billion in 2020, down USD4.5 billion YOY and beating its stated reduction target for the year of USD3.0-4.0 billion.
As MRC wrote before, Royal Dutch Shell has reported an outage at its olefins plant in Deer Park, Texas, USA, on 5 January, 2021. The plant flared for 16 hours following unspecified process upset. Maximum steam cracker operating rate in Texas falls to 89%.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
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