Shell LNG trading provides quarterly boost despite output drop

EARNINGS from Shell’s liquefied natural gas (LNG) trading operations are likely to have been significantly higher in the fourth quarter of last year, despite a sharp output drop owing to plant outages, it said on Friday (Jan 6).

In its update ahead of its full-year results on Feb 2, Europe’s largest oil and gas company also expects to pay about US$2 billion in additional 2022 taxes related to the European Union and British windfall taxes imposed on the energy sector.

Fourth-quarter LNG liquefaction volumes are expected to be the lowest since the company acquired BG Group in 2016 for US$53 billion, dropping between 6.6 million and seven million tonnes as a result of prolonged outages at two major plants in Australia.

But Shell, the world’s top LNG trader, said its LNG trading results are set to be “significantly higher” than in the previous quarter.

The company’s shares rose nearly 1 per cent as the market opened. Its third-quarter results were dented by weaker refining performance and a slump in LNG trading.

The LNG trading division recorded a loss of nearly US$1 billion in Q3 2022 after traders were caught out by a sharp rally in European gas prices when Russia halted supplies.

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Yet Shell remained on track for record annual profit in 2022, having posted earnings of US$30 billion in the first three quarters, just shy of the 2008 record profit of US$31 billion.

It expects fourth-quarter oil product trading results to be “significantly lower” than the third quarter.

The London-based company, whose chief executive Wael Sawan succeeded Ben van Beurden on Jan 1 after nine years at the helm, said in October that it intends to increase its dividend by 15 per cent in the fourth quarter.

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Several governments across Europe and Britain have imposed windfall taxes on energy companies this year to rein in excess profits as energy prices have soared since Russia’s invasion of Ukraine.

Shell expects to pay US$2 billion in taxes related to the windfall levies on top of the US$360 million it announced earlier in 2022. REUTERS