The firm reveals a write-down mainly associated with it’s Rotterdam and Singapore plants and says that trading in its core gas division will decline on the quarter.
ADVERTISEMENTShell said on Friday it would register an impairment charge of up to $2 billion, meaning it will downgrade the value of its assets.
The write-down is linked to events at Shell’s Singapore and Rotterdam plants, which have been sources of disappointment for the firm.
On Tuesday, the fuel giant said it would be pausing construction at its biofuel site in Rotterdam, a Dutch port city, because of weak demand.
As part of a push to finance more sustainable energy projects, Shell began constructing the plant in 2021. Initial forecasts expected the 820,000-ton-a-year site to become operational by 2025, although production is now earmarked to start towards the end of the decade.
«Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,» said Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director.
European biofuel projects have faltered recently due to rising US supplies and dampened demand at home, partially driven by the softening of a Swedish biofuel mandate last year.
This climbdown isn’t, however, just constrained to one product.
A number of oil and gas companies are now rethinking their wider climate targets because of a global rise in fuel prices, which makes traditional projects more profitable.
Shell’s rival BP, for instance, said last week it was halting new offshore wind projects. The pivot from new CEO Murray Auchincloss clearly distances him from predecessor Bernard Looney, who was seeking to invest more in renewables.
This comes despite expert warnings that Europe is likely to miss most of its climate objectives set for 2030.
As well as the setback in Rotterdam, Shell’s recent impairment charge was related to operations in Singapore.
Back in May, the energy firm said it was divesting its Singaporean refinery and chemicals assets to a joint venture company, formed by Indonesia’s Chandra Asri and Glencore.
Shell now expects an impairment of $600 to $800 million on these assets.
Also in Friday’s statement, Shell said it expects second-quarter trading and optimisation results in its main gas division to remain stable on the year.
Quarter-to-quarter performance is predicted to slide in this period.
