Shell Dives To $18.1bn Q2 Loss On Coronavirus-Hit Oil Market

 

 

 

Anglo-Dutch energy major Royal Dutch Shell posted Thursday a colossal net loss of $18.1 billion (15.4 billion euros) for the second quarter, blaming massive asset writedowns on the coronavirus-hit oil market.

The performance, contrasting sharply with profit after tax of $3.0 billion a year earlier, was sparked by a huge $16.8-billion charge on chronic fallout both from COVID-19 and collapsing oil prices.

The vast charge was taken “as a result of revised medium- and long-term price and refining margin outlook assumptions in response to the COVID-19 pandemic and macroeconomic conditions as well as energy market demand and supply fundamentals,” Shell said in a results statement.

The quarterly performance meanwhile reflected lower prices for oil, liquefied natural gas (LNG) and gas, while it was also adversely impacted by lower refining margins and oil products sales volumes.

Production dipped six percent to 3.4 million barrels of oil equivalent per day in the reporting period — and is forecast to drop further in the third quarter.

“Shell has delivered resilient cash flow in a remarkably challenging environment,” said Chief Executive Ben van Beurden in Thursday’s statement.

“We continue to focus on safe and reliable operations and our decisive cash preservation measures will underpin the strengthening of our balance sheet.”

The energy giant had already forecast in June that it would face a charge of between $15 billion and $22 billion in the second quarter, after crude futures had suffered a spectacular crash on COVID-19 fallout, the Saudi-Russia price war and oversupply.

Both Shell and British rival BP, which reports its earnings next week, have opted to book charges in the second quarter on sustained coronavirus fallout that ravaged the world’s appetite for crude oil.

Shell had already plunged into the red in the first quarter of this year on the back of the oil price crash, which prompted it to cut its shareholder dividend for the first time since the 1940s.

The deadly COVID-19 outbreak slammed the brakes on the global economy and savaged oil-intensive industries.

The outbreak also sent oil prices off a cliff from March onwards — and even caused them briefly to turn negative in April.

Prices have since rebounded sharply on an easing global crude supply glut and as governments relax lockdowns and businesses slowly reopen.

Crude futures currently stand at about $40 per barrel, which is still well down on the same stage last year.

 

 

 

-AFP

Shell Declares Force Majeure On Gas Supplies To Nigeria

Shell-petroleumShell Petroleum Development Company has declared force majeure (FM) on gas supplies to the Nigeria Liquefied Natural Gas (LNG) export facility on Bonny Island.

“The Shell Petroleum Development Company of Nigeria Ltd (SPDC) declared force majeure on gas supply to NLNG on 8 August 2016, following a leak on the Eastern Gas Gathering System (EGGS-1) pipeline through which it supplies the bulk of its gas to NLNG,” a spokesman told Reuters in an emailed statement.

SPDC, Royal Dutch Shell’s Nigerian unit, is a joint venture with state oil company Nigerian National Petroleum Corporation (NNPC). They supply gas to the LNG plant.

The declaration may impact exports from the facility, which is situated near Port Harcourt, Rivers State.

“The pipeline has been shut down for a joint investigation visit into the cause of the leak and repairs,” the spokesman said, adding that SPDC continues to supply gas to the facility through other pipelines.

NLNG, set up 16 years ago to export gas, is owned by NNPC, Shell, Total and Eni.

It has the capacity to produce 22 million tonnes of LNG a year and has long-term supply contracts with Italy’s Enel , Shell, France’s Engie SA and Portugal’s Galp, among others. It also sells on the spot market.

Down more than two-thirds from 2014 levels, spot LNG prices have been rising in recent months due to production outages in Angola and Australia.

The rally ran out of steam last week and prices declined sharply as Chevron’s Gorgon LNG project resumed production, but potentially lower output from Nigeria LNG may again tighten supply.