A Shell tanker truck delivers fuel to a gas station operated by Royal Dutch Shell Plc., In Rotterdam, The Netherlands.
Jasper Juinen | Bloomberg | Getty Images
Royal Dutch Shell said on Monday that it will write down the value of oil and gas assets by $ 3.5 billion to $ 4.5 billion following a series of impairments this year as it adjusts to a weaker outlook.
In an update prior to its fourth quarter results on Feb. 4, Shell said after-tax costs were due in part to impairments on the Appomattox field in the U.S. Gulf of Mexico, refinery closures and liquefied natural gas contracts. (LNG).
It said some costs associated with the restructuring would be recognized in 2021.
In October, Shell, the world’s largest LNG trader, wrote off the value of its LNG portfolio at just under $ 1 billion, focusing on its flagship Prelude project in Australia.
That followed a $ 16.8 billion write-off in the second quarter, which also included Prelude and a sharp cut in the price outlook.
On February 11, CEO Ben van Beurden will unveil Shell’s long-term strategy to significantly reduce greenhouse gas emissions and expand its low-carbon energy and power businesses.
In its update, the Anglo-Dutch company also said it expects oil and gas production in its upstream division to be approximately 2,275 to 2,350 million barrels of oil equivalent per day, slightly higher than in the third quarter.
Production was affected by the closure of platforms in the Gulf of Mexico due to hurricanes and mild weather in Northern Europe.
LNG liquefaction volumes are expected to be between 8 and 8.6 million tonnes.
The oil refinery’s utilization rate is expected to be between 72% and 76% of capacity in the quarter, reflecting continued weak demand as a result of the coronavirus pandemic.