Shell Reports $21.7bn Loss In 2020

Royal Dutch Shell Plc lost $21.7 billion in 2020, compared with 2019 earnings of $15.8 billion.

The company reported a fourth-quarter 2020 loss of $4 billion, compared with $965 million in earnings in same period the year-earlier. Fourth-quarter losses were led by the upstream and oil products segments, while both integrated gas and chemicals enjoyed profits.

Fourth-quarter 2020 results reflected lower realized prices for oil and LNG as well as lower production volumes and realized refining margins compared with fourth-quarter 2019, Shell said. This was partly offset by lower operating expenses and higher chemicals margins.

During the quarter, QGC Common Facilities Co. Pty Ltd, a wholly-owned subsidiary of Shell, agreed to the sale of a 26.25% interest in Queensland Curtis LNG to Global Infrastructure Partners Australia for $2.5 billion. The transaction is subject to regulatory approval in Australia and customary conditions and is expected to complete in first-half 2021.

Earlier in 2021, Shell completed the sale of its 30% interest in Oil Mining Lease 17 in the Eastern Niger Delta, and associated infrastructure, to TNOG Oil and Gas Ltd, a related company of Heirs Holdings Ltd and Transnational Corp. of Nigeria PLC, for $533 million. A total of $453 million was paid on completion, with the balance to be paid over an agreed period.

Fourth-quarter 2020 integrated gas segment earnings were $20 million. This included a net charge of $519 million due to the fair value accounting of commodity derivatives and a charge of $481 million related to onerous contract provisions. Compared with fourth-quarter 2019, integrated gas adjusted earnings of $1.1 billion primarily reflected lower realized prices for LNG, oil, and gas, and lower contributions from trading and optimization, partly offset by lower operating expenses.

Upstream segment earnings for fourth-quarter amounted to a loss of $2 billion. This included a post-tax impairment charge of $1.3 billion mainly related to partial impairment of the Appomattox asset in the US Gulf of Mexico. Compared with fourth-quarter 2019, upstream adjusted earnings were a loss of $748 million, reflecting lower oil and gas prices, lower production volumes mainly driven by hurricanes affecting US Gulf of Mexico production and OPEC+ restrictions, and unfavorable deferred tax movements. These were partly offset by lower well write-offs, and lower operating expenses.

The oil products segment registered a loss of $1.8 million. This included a post-tax impairment charge of $1.3 billion, mainly related to assets in the Netherlands and in Singapore, and the shutdown of the 240,000-b/d Convent refinery in Louisiana. The shutdown of the Convent refinery also led to further post-tax charges of $661 million, related to provisions for onerous contracts, and redundancy and restructuring.

Also included was a net charge of $352 million due to the fair value accounting of commodity derivatives. Compared with the fourth quarter 2019, oil Products adjusted earnings of $540 million reflected lower realized refining margins due to a weaker macroeconomic environment and the COVID-19 pandemic, and lower contributions from trading and optimization. This was partly offset by lower operating expenses, and favorable deferred tax movements.

Fourth-quarter chemicals segment earnings were $367 million, which reflected higher realized margins in base chemicals and intermediates from a stronger price environment, compared with fourth-quarter 2019.

Source: OGJ


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