Shell warns of cash hit from soaring gas and power prices

LONDON: Royal Dutch Shell on Thursday said that soaring natural gas and electricity prices around the world will have a significant impact on its revenue in the third quarter.

In an update ahead of quarterly results this month, Shell also said that damage caused by August’s Hurricane Ida will dent earnings by $400 million in the quarter.

Natural gas and electricity prices around the world have been driven higher as tight gas supplies have collided with strong demand in economies recovering from the COVID-19 pandemic.

Shell is the world’s top seller of liquefied natural gas (LNG), accounting for about 20% of global demand, though its sales have declined in recent months because of production problems.

Liquefaction in the quarter is expected to be between 7 to 7.5 million tonnes, the lowest level since 2016, “reflecting feedgas constraints and additional maintenance”, Shell said.

The company said that cashflow at its LNG division “is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment”.

Shell’s upstream oil and gas production fell in the quarter to between 2.025 and 2.1 million barrels of oil equivalent per day (boed) owing to a prolonged outage of about 90,000 boed at some of its offshore fields in the Gulf of Mexico after Hurricane Ida. – Reuters

Source: The Star


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