Shell's Q4 Shift: Rising Stakes in Oil and Gas

Shell revised its LNG production outlook downward and anticipates lower trading results for oil and gas in Q4. Non-cash impairments will affect renewables. Amidst offshore wind investments cutbacks, trading results are expected to dip due to hedging contract expirations and decreased demand in its chemicals and oil products division.

Shell has announced a downgrade in its liquefied natural gas (LNG) production forecast for the fourth quarter, accompanied by a prediction of significantly lower trading returns in its oil and gas sectors compared to the previous quarter. This is detailed in a trading update preceding the January 30 release of their full-year financial results.

The energy giant is set to incur non-cash post-tax impairments ranging from $1.5 billion to $3 billion, particularly affecting its renewables division linked to assets in Europe and North America. This comes amid a strategic business pivot under CEO Wael Sawan, focusing on more profitable segments while retreating from new offshore wind projects.

Additionally, Shell faces diminished expectations in its chemicals and oil products units due to subdued seasonal demand. The expiration of hedging contracts, initially taken to mitigate potential Russian production losses, has further affected trading outcomes. Despite these setbacks, shareholder returns are reportedly not endangered.

(With inputs from agencies.)