Royal Dutch Shell expects to slash the worth of its property by as a lot as $22 billion because the coronavirus disaster roils vitality markets.
The oil and fuel large introduced the huge write-down Tuesday because it minimize its vitality value forecasts to account for the pandemic, which has led to worldwide lockdowns which have restricted journey and depressed demand for gas.
Shell plans to lop as much as $9 billion off the worth of its built-in fuel operations, which embody the world’s largest floating liquefied pure fuel facility in Australia. The Netherlands-based firm may even write down its oil refining portfolio by as a lot as $7 billion whereas its oil and fuel manufacturing property will take a success as giant as $6 billion.
“Given the impression of COVID-19 and the continuing difficult commodity value atmosphere, Shell continues to adapt to make sure the enterprise stays resilient,” Shell stated in a information launch.
The world’s largest gas retailer predicts that benchmark Brent crude oil will go for $35 a barrel on common this yr, which is able to tick as much as $40 subsequent yr and $50 in 2022. These new projections mark a major minimize from Shell’s earlier forecast of $60 a barrel for every of the three years.
Shell additionally expects its second-quarter gross sales volumes for oil merchandise to drop to three.5 to 4.5 million barrels per day from about 5.three million within the first quarter, “pushed by a major drop in demand associated to the impression of COVID-19.” That’s nonetheless higher than its earlier forecast of three to Four million barrels a day.
Shell’s announcement got here on the heels of rival BP’s transfer to slash the worth of its property by as much as $17.5 billion after predicting the pandemic will depress vitality costs for years to return. Each corporations are additionally working to maneuver away from fossil fuels and scale back their emissions to “web zero” by 2050.
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