Shell’s profits surge amid 12 percent rise in LNG sales and details costs of Russian market exit

Tuesday, 10 May 2022
Free Read

LNG News Editor: 

Shell reported an almost three-fold jump in earnings to $9.1 billion compared with $3.2Bln in the same three months of 2021 as quarterly LNG sales increased along with oil and refined product prices.

Shell reported quarterly LNG sales of 18.29 million tonnes, up almost 12 percent from the 16.38MT total in the first quarter of 2021.

The company’s Integrated Gas division earnings, including LNG, came to $3.08Bln versus $2.45Bln in the prior-year quarter.

“Trading and optimisation results for Integrated Gas were similar to the fourth quarter 2021 and continued to benefit from favourable conditions,” said Shell.

Russian costs

“Total oil and gas production, compared with the fourth quarter of 2021, decreased by 8 percent due to higher maintenance driven by Pearl GTL and Prelude FLNG, partly offset by lower maintenance in Trinidad and Tobago,” added Shell.

LNG liquefaction volumes increased by 1 percent due to higher feed-gas supply coupled with lower maintenance.

Shell confirmed it had taken $3.9Bln of post-tax charges in the first quarter as a result of its exit from Russia.

The company had previously warned it could write off between $4Bln and $5Bln in the value of its assets after pulling out of the country.

Shell said that under its “orderly withdrawal” from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and LNG it had made progress.

“Shell has stopped all spot purchases of Russian crude, LNG and cargoes of refined products directly exported from Russia,” the London-based company said.

“Shell will not renew long-term contracts for Russian oil, unless under explicit government direction, but is still legally obliged to take delivery of crude bought under contracts that were signed before the invasion,” it explained.

“By the end of this year, all of Shell's long-term third-party purchases of Russian crude will stop, except for two contracts with a small, independent Russian producer.

Subsequently, this led to recognition of pre-tax charges of $4.23Bln (post-tax: $3.89Bln) in the first quarter 2022 consolidated income statement.

These charges were primarily recognised in the share of profits of joint ventures such as a $1.61Bln impairment related to the Sakhalin II LNG plant in the Russian Far East.

It also includes interest and other income and expenses of $1.12Bln in write-downs related to the Nord Stream II loan, the cancelled second pipeline from Russia to Germany in which Shell was a shareholder.

Other charges included $858M in depreciation, depletion and amortisation related to the Salym, Gydan, Marketing non-current assets and right-of-use assets.

Other adjustments included revenue of $335M related to marked-to- market changes and selling, distribution and administrative expenses of $219M.

Shell explained that in relation to the assets for which the above charges are recognised in the first quarter 2022, the remaining balance sheet carrying amount as at March 31, 2022 is some $1Bln in total.

Related Video

Free Read