Saturday, February 24

Sky-High Fuel Prices Lead to Considerably More Profit for Shell

Oil and gas group Shell expects a profit in the second quarter that will be USD 1 billion higher than in the previous period due to the higher margins on fuel production alone. The company released an interim trade update highlighting the impact of skyrocketing gasoline prices in several countries.

 

Shell’s update is the first indicator of how much money is flowing into the coffers of the major oil companies as a result of the sharp rise in fuel prices. The refining margin increased to $28 per barrel during the measurement period, compared to more than $10 in the first three months of the year. In addition, the increase will have a positive effect of between $800 million and $1.2 billion compared to the previous period, it was reported.

However, Shell is also saddled with a cost item now that it no longer includes the results of a Russian gas project in Eastern Siberia. In the update, Shell says it expects a negative effect of between 300 million and 350 million dollars because it scraps the results of the Sakhalin gas project.

Due to the war in Ukraine and the sanctions against Russia due to the invasion, Shell earlier promised to withdraw from Russia. In the second quarter of the year, this will already be reflected in the gas trading results. These are expected to be lower than in the first quarter. Shell is also counting on one-off costs of up to approximately 200 million dollars. These costs relate to write-downs on wells, provisions and commercial settlements.

The production of oil equivalents will also be slightly lower than expected. This is partly due to additional maintenance work.

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