Shell reverses up to $4.5bn in oil and gas writedowns

Shell said on July 7 it would be booking $3.5-4.5bn in impairment reversals in the second quarter, on the back of soaring commodity prices.

Ahead of releasing its results for the quarter on July 28, Shell said its refining margins nearly tripled over the period, versus the previous three months, averaging $28.04/barrel. That means it is set to earn an extra $800mn to $1.2bn, the company said.

Shell is also predicting strong earnings from trading, although lower than in the first quarter. Besides high oil and gas prices now, the company said it had "revised its mid and long-term oil and gas commodity prices reflecting the current macroeconomic environment as well as updated energy market demand and supply fundamentals."

Shell has raised its assumed price for Brent to $80/b, up from the $60 it predicted in its 2021 annual report. The company now sees Brent averaging $70 in 2024 and $65 in the long term, versus $60 and $63 respectively in its previous forecast.

The company completed $8.5bn in share buybacks during the second quarter.

Oil and gas production is expected to average up to 2.93mn barrels of oil equivalent/day, representing its lowest level in at least seven years, due to considerable field maintenance. LNG volumes are expected to come to 7.4-8.0mn metric tons, reflecting Shell's derecognition of the Sakhalin-2 project, which was seized by Russian authorities on June 30.