Shell will accept $1.3 billion in emissions allowances struck at ‘significantly lower’ profits
- Shell said gas production was hit by “planned maintenance” at a factory in Qatar
- The FTSE 100 company said oil refining margins remained at £4.41 per barrel
Shell has warned of a $1.3 billion cash flow impact for the fourth quarter of 2024 due to emissions certificate payments.
Europe’s largest energy company said the payments related to biofuel programs in the US and German Fuel Emissions Trading Acts.
It came as the oil giant told shareholders that fourth-quarter profits would be “significantly lower” due to the expiry of hedging contracts.
Shell’s total gas production in the last three months of last year is also likely to be lower due to maintenance at a plant in Qatar.
The company expects its integrated gas segment to have produced 880,000 to 920,000 barrels of oil equivalent per day during the period, compared to 941,000 Boe/d in the third quarter.
The company said production was affected by “planned maintenance” at the Pearl Gas to Liquids plant, the world’s largest GTL facility, which Shell operates jointly with QatarEnergy.
Shell also lowered its fourth-quarter liquefied natural gas production forecast to between 6.8 million and 7.2 million tonnes due to a decline in cargo and feed gas production, after previously forecasting 6.9 million to 7. had expected 5 million tons.
Financial hit: Shell has warned of a $1.3 billion cash flow impact in the fourth quarter
Meanwhile, the FTSE 100 group said oil refining margins remained around $5.5 (£4.41) per barrel after falling significantly last year.
Brent crude futures ended 2024 about 3 percent lower at $74.64 a barrel, the second straight year of decline.
Oil prices were affected by a weak Chinese economy, slower demand growth and increasing supply from the United States and OPEC+ countries.
Prices have fallen significantly since early 2022, when the easing of Covid-19 restrictions and Russia’s large-scale invasion of Ukraine delivered a huge windfall to the fossil fuel sector.
However, companies have continued to deliver impressive results while delivering huge returns to their shareholders.
In its third-quarter results, Shell reported an adjusted profit of $6 billion for the three months ended September, due to strong LNG demand.
Led by CEO Wael Sawan, the company has canceled plans to cut oil production and said it will not launch any new offshore wind projects.
Mark Crouch, market analyst at investment platform eToro, said the latest move “raises questions about the long-term viability of wind farms as a practical investment for the company’s shareholders.”
He added: “Sawan’s relentless focus on pursuing projects that generate value for investors appears to prioritize short-term returns over longer-term sustainable energy commitments.”
Shell shares were 1.4 per cent lower at 2,581.5p on Wednesday morning, although they still remain above their pre-pandemic levels.
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