Shell Plc has indicated that it foresees a surge in earnings from gas trading in the fourth quarter of 2023. This positive trajectory is attributed to seasonal market dynamics and a notable increase in liquefied natural gas (LNG) production, a significant driver of the company’s recent profitability.
However, the company anticipates lower profits from its chemicals and oil products division during the same period. Shell projects a loss for this segment, signaling a shift in the composition of earnings for the quarter. Despite mixed results for the significant oil sector, Shell’s overall revenues in the previous quarter met market expectations, as reported by Bloomberg.
This consistent performance aligns with Shell’s commitment to its accelerated share buyback program and CEO Wael Sawan’s pledge to prioritize shareholder returns. The full Q4 results are scheduled for release on February 1st, 2024, providing a comprehensive view of Shell’s financial performance and strategic direction.
Shell’s gas trading division has proven to be a lucrative venture, particularly since Russia’s invasion of Ukraine heightened volatility in gas prices. The company has narrowed its production range for gas, focusing on 880,000 to 920,000 barrels, the equivalent of oil a day. Simultaneously, it has increased the lower end of its liquefaction forecasts to 6.9 million tons from the previous 6.7 million.
In contrast, trading and optimization from Shell’s chemicals and oil products division are expected to experience a significant decline compared to the previous quarter. The company has refined its forecast range for upstream production volumes to 1.83 million to 1.93 million barrels per day.
A recent development in Nigeria has added a layer of complexity to Shell’s operations. The Supreme Court upheld an appeal by Shell Plc’s local unit, Shell Petroleum Development Co. of Nigeria Ltd., against a ruling related to a pollution case. This ruling has prevented the oil major from selling billions of dollars worth of assets in the country. The court order issued in 2022 paused the disposal of onshore oil operations pending the case’s outcome.
While the full details of the judgment are yet to be published, Shell is assessing the implications. SPDC holds a 30% stake in a joint venture in Nigeria, with the state oil company among other shareholders.
“We note the Supreme Court’s judgment on SPDC’s appeal,” said a spokesperson for the unit. SPDC is currently evaluating the implications, according to the statement. Mohammed Ndarani Mohammed, a lawyer representing the plaintiffs, said he would read the ruling before deciding whether to comment.
Shell’s presence in Nigeria has spanned more than half a century. However, nearly three years ago, then-CEO Ben van Beurden signaled the company’s intention to exit onshore oil positions due to persistent sabotage and theft. Despite this, Shell remains committed to offshore gas assets.
