Shell LNG sales volumes rise to over 71MT ahead of FLNG start

Tuesday, 05 February 2019
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Output at liquefaction plants is expected to fall in 2019 because of maintenance activities

LNG Journal editor

Royal Dutch Shell said its annual LNG sales volumes rose by 8 percent to more than 71 million tonnes, including 17.39 million tonnes in the fourth quarter as higher prices boosted earnings and the Anglo-Dutch company progressed with commissioning of the Prelude floating LNG plant offshore northwest Australia. 

Shell reported that its earnings mainly benefited from higher realised oil, gas and LNG prices as well as stronger contributions from crude oil and LNG trading, partly offset by movements in deferred tax positions.

Liquefaction

Full-year earnings of $21.4 billion also reflected higher energy prices. Overall quarterly earnings rose 47 percent to $5.59Bln versus $3.80Bln in the same quarter of 2017.

Shell’s own LNG liquefaction volumes rose 3 percent in the quarter to 8.78MT from 8.83MT in the same three months of 2018.

Full-year liquefaction volumes amounted to 34.32MT compared with 33.24MT in 2017.

“LNG liquefaction volumes are expected to be 0.4-0.7 million tonnes lower, mainly as a result of divestments and higher maintenance activities,” said Shell.

Integrated Gas, the division containing most LNG activities, reported fourth-quarter income amounting to $2.36 billion compared with $1.63Bln in the same quarter of 2017.

Full-year Integrated Gas results came in at $9.39 billion versus 5.26Bln in 2017.

“Production volumes were up by 8 percent compared to the full year 2017, mainly reflecting lower maintenance activity and additional wells from existing fields,” said Shell.

“LNG liquefaction volumes were 3 percent higher, largely driven by increased feed-gas availability and lower maintenance activities. This more than offset the impact of divestments,” it added.

In December, Shell announced that wells had been opened at its Prelude FLNG facility and commissioning was continuing.

“During this initial phase of production, gas and condensate are produced and moved through the facility. Once this has concluded, the facility will be prepared for reliable production of LNG and LPG,” explained Shell.

Shell is also advancing with its LNG Canada project in British Columbia as it increases its LNG cargo trading worldwide from volumes produced in nations such as Qatar, Australia, Nigeria and Russia and new entrants like the US.

Shell Chief Executive Ben van Beurden said he was pleased that Shell had achieved its 2018 targets.

“We delivered on our promises for the year, including the completion of the $30 billion divestment programme and starting up key growth projects while maintaining discipline on capital investment,” said Van Beurden.

In its outlook, Shell said Integrated Gas production is expected to decrease by some 140,000-170,000 barrels of oil equivalent per day, mainly due to divestments, the transfer of some activities into the Upstream segment as of 2019 and higher maintenance activities.

The company said that total proved reserves are expected to be around 11.6 billion barrels of oil equivalent. Acquisitions and divestments of 2018 reserves are expected to account for a net reduction of 200 million barrels of oil equivalent.

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