Shell: gas sales down despite stable production

Share:

Oil and gas giant Shell announced on Friday that its gas sales were expected to show a “marked decline” in its second-quarter results, compared with a “good” first quarter in particular and despite stable production.

Shell anticipates lower production and $3 billion in write-downs

In a press release, the Group also states that its hydrocarbon production is expected to be lower than in the first quarter, due to maintenance in the Gulf of Mexico, Norway, Malaysia and Brazil. He also notes that impairments of up to $3 billion after tax are expected in the second-quarter accounts, to be published on July 27, although they will have “no impact on cash”. The share price reacted little: -0.18% to 2,260.50 pence in early trading on the London Stock Exchange. AJ Bell analyst Russ Mould notes that we can expect results “less impressive than in recent quarters”.

In the first quarter, Shell posted a 22% year-on-year increase in net profit to $8.7 billion. The sector’s majors had posted flamboyant sector results after a record 2022 due to soaring hydrocarbon prices generated by the Russian invasion of Ukraine. Shell also caused further controversy among environmentalists on Thursday, when its CEO Wael Sawan told the BBC that it would be “dangerous” to cut hydrocarbon production, arguing that this could cause a rebound in crude or gas prices and exacerbate the rising cost of living.

Shell revisits crude oil production cuts and considers a U.S. listing

Last month, the oil giant reneged on its commitment to reduce crude production by 1 to 2% a year, and is now forecasting “stable” production until 2030. These announcements were accompanied by a further redistribution of cash to shareholders. An approach designed to “boost Shell’s stock market valuation” and appeal to investors, but which could result in “greater regulatory and political pressure”, says Mr. Mould.

Shell’s CEO has also “indicated that he is open to a US listing, which would be another blow to the London market”, notes Mr. Mould. The other British “major”, BP, also announced in February, alongside record results, a slowdown in its energy transition. On Thursday, BP boss Bernard Looney told a seminar of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna that “we need to invest in today’s energy system, where, even if it’s not popular with some, oil and gas represent 55% of the energy mix. If we don’t invest in it, we’ll have a mismatch between supply and demand”.

Turkey has connected its gas grid to Syria’s and plans to begin supplying gas for power generation in the coming weeks, according to Turkish Energy Minister Alparslan Bayraktar.
Despite record electricity demand, China sees no significant increase in LNG purchases due to high prices and available alternative supplies.
US natural gas production and consumption are expected to reach record highs in 2025, before slightly declining the following year, according to the latest forecasts from the US Energy Information Administration.
Naftogaz announces the launch of a natural gas well with a daily output of 383,000 cubic meters, amid a sharp decline in Ukrainian production following several military strikes on its strategic facilities.
Sonatrach and ENI have signed a $1.35 billion production-sharing agreement aiming to extract 415 million barrels of hydrocarbons in Algeria's Berkine basin, strengthening energy ties between Algiers and Rome.
Maple Creek Energy is soliciting proposals for its advanced 1,300 MW gas project in MISO Zone 6, targeting long-term contracts and strategic co-location partnerships with accelerated connection to the regional power grid.
VMOS signs a USD 2 billion loan to finance the construction of the Vaca Muerta South pipeline, aiming to boost Argentina's energy production while reducing costly natural gas imports.
According to a Wood Mackenzie report, Argentina could achieve daily gas production of 180 million cubic metres per day by 2040, aiming to become a key regional supplier and a significant exporter of liquefied natural gas.
Côte d'Ivoire and the Italian group Eni assess progress on the Baleine energy project, whose third phase plans a daily production of 150,000 barrels of oil and 200 million cubic feet of gas for the Ivorian domestic market.
The extreme heatwave in China has led to a dramatic rise in electricity consumption, while Asia records a significant drop in liquefied natural gas imports amid a tight global energy context.
E.ON, together with MM Neuss, commissions Europe’s first fully automated cogeneration plant, capable of achieving a 91 % fuel-use rate and cutting CO₂ emissions by 22 000 t a year.
Facing the lowest temperatures recorded in 30 years, the Argentine government announces reductions in natural gas supply to industries to meet the exceptional rise in residential energy demand across the country.
Solar power generation increased sharply in the United States in June, significantly reducing natural gas consumption in the power sector, despite relatively stable overall electricity demand.
Golden Pass LNG, jointly owned by Exxon Mobil and QatarEnergy, has asked US authorities for permission to re-export liquefied natural gas starting October 1, anticipating the imminent launch of its operations in Texas.
Delfin Midstream reserves gas turbine manufacturing capacity with Siemens Energy and initiates an early works programme with Samsung Heavy Industries, ahead of its anticipated final investment decision in the autumn.
Norwegian group DNO ASA signs gas offtake contract with ENGIE and secures USD 500 million financing from a major US bank to guarantee future revenues from its Norwegian gas production.
Golar LNG Limited has completed a private placement of $575mn in convertible bonds due in 2030, using part of the proceeds to repurchase and cancel 2.5 million of its own common shares, thus reducing its share capital.
Shell Canada Energy announces shipment of the first liquefied natural gas cargo from its LNG Canada complex, located in Kitimat, British Columbia, primarily targeting fast-growing Asian economic and energy markets.
The Australian government is considering the establishment of an east coast gas reservation as part of a sweeping review of market rules to ensure supply, with risks of shortages signalled by 2028.
The increase in oil drilling, deepwater exploration, and chemical advances are expected to raise the global drilling fluids market to $10.7bn by 2032, according to Meticulous Research.