Shell warns about weaker LNG and oil sales in the fourth quarter

Shell cut its forecast for liquefied gas production in the fourth quarter of the year on Wednesday. It also said that oil and gas trading is expected to be lower than the results from the previous three-month period.

Shell said in a trading update before the full-year results on Jan. 30, it would also take non-cash impairments of $1.5 billion up to $3 billion, including $1.2 billion for its renewables division linked to European assets and North American ones.

Shell announced last month that it would be stepping back on new offshore wind investments, and splitting its Power Division following an extensive review. This was part of Wael Sawan’s plan to focus the company’s efforts on the most lucrative parts.

Shell, the world's biggest LNG trader, said that the trading results of the division for the fourth quarter will be significantly lower than the three previous months. This is due to the expiration of the hedging contracts Shell entered into in 2022 in order to protect Shell against the loss of Russian production as a result of the invasion of Ukraine.

Due to seasonality, the trading in its chemical and oil products division is also expected to be lower than last quarter.

Shell does not disclose earnings figures for its trading activities.

The British company has lowered its LNG production forecasts for the third quarter from 6.9-7.5 millions metric tons to 6.8-7.2, citing fewer feedgas deliveries and cargo deliveries.

Biraj Borkhataria, an analyst at RBC Capital Markets, said that the release was negative. He noted that there were weaker trading in oil, gas, and power. However, he added, this would not affect shareholder returns.

(source: Reuters)