Shell, a major energy company, announced a $1.3 billion (€1.04 billion) charge for emissions certificates in the final quarter. This charge, stemming from the timing of payments in Germany and the US, is a significant blow to the company's financial outlook.
The company's gas profit is expected to fall significantly in the final quarter compared to the previous three. This downturn is directly linked to expiring hedging contracts, measures put in place by the company in 2022 to mitigate the effects of potential Russian production drops following the Ukraine invasion.
Lower liquefied natural gas (LNG) production also contributed to the decrease in expected profit. Shell cited lower feedgas (raw gas) and fewer LNG cargos as reasons for a drop in production from 7.5 million tonnes in the third quarter to between 6.8 and 7.2 million tonnes. Shell is the world's largest LNG trader, a key player in global energy supply.
Despite the challenges, Shell's oil refining margins remain relatively stable at around $5.5 per barrel. However, this is a result of a decline in global demand for oil products from both consumers and industries during the previous year. Factors like the increased prevalence of electric vehicles and economic slowdowns in major markets like China have influenced this global demand decrease.
This downturn presents a further challenge to the company, particularly considering its position as the second-largest company in the FTSE 100 by market capitalization. The recent exodus of companies from the London Stock Exchange raises further questions about Shell's future listing location, with a possible move to New York being a subject of discussion.
