Shell expects lower liquefaction volumes in Q4, LNG earnings surge

LNG giant Shell is expecting lower liquefaction volumes in the fourth quarter of 2021 due to unplanned maintenance, mainly in Australia.

Shell said in an update on Friday published ahead of its quarterly results that the firm forecasts its liquefaction volumes to reach between 7.7 and 8.3 million tonnes in the October-December period.

The firm said unplanned maintenance, mainly in Australia, had impacted production and liquefaction volumes, but it did not reveal any further information.

In its third-quarter report, Shell said it had expected liquefaction volumes to reach between 8 and 8.6 million tonnes in the fourth quarter.

The company’s liquefaction volumes dropped year-on-year in the third quarter to 7.39 million tonnes but also compared to the previous quarter of 7.49 million tonnes

To remind, Shell suspended production at its giant Prelude FLNG located offshore Australia after an incident on December 2.

The 3.6 mtpa unit will remain offline until Shell completes a detailed investigation into the incident and assures Australian regulator NOPSEMA that it is safe to operate.

Besides Prelude, Shell operates the 8.5 mtpa QCLNG plant on Curtis Island in Australia’s Queensland and has a 16.67 percent stake in Woodside’s NWS LNG project and a 25 percent stake in Chevron’s Gorgon LNG project.

The giant 15.6 mtpa Gorgon plant on Barrow Island in Western Australia has experienced several closures last year due to repairs works. Chevron said on December 3 it had closed the third train at the facility.

LNG earnings to be “significantly higher”

Shell expects trading and optimization results in its integrated gas segment to surge in the fourth quarter when compared to the previous quarter.

Results would be “significantly higher compared to the third quarter of 2021, overcoming ongoing supply issues and capturing unique optimization opportunities generated through the large scale and scope of our LNG trading portfolio in the prevailing high LNG spot price environment,” Shell said.

The JKM spot LNG price surged to $56.326/MMBtu in October. It hit the highest level for the LNG benchmark for Asian spot LNG since Platts launched it in early 2009.

The price declined in the meantime but it continues to trade well above $30/MMBtu.

Shell’s integrated gas segment logged a loss of $3.24 billion in the third quarter, compared to a loss of $151 million in the same period a year ago and a profit of $422 million in the prior quarter.

Adjusted earnings reached $1.68 billion, rising 4 percent from the previous quarter but also from $768 million in the same period last year.

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