Shell expects “significantly higher” LNG trading results in Q4

LNG giant Shell is expecting “significantly higher” trading and optimization results for its integrated gas business in the fourth quarter of 2022 compared to the previous quarter.

Shell revealed this in its fourth-quarter update note on Friday ahead of its full-year results on February 2.

The company expects LNG liquefaction volumes to be between 6.6 and 7 million tonnes in the fourth quarter, down from the previous forecast of 7-7.6 million tonnes.

This mainly reflects “longer than expected plant outage at Prelude and operational issues at QGC in Australia,” it said.

In December, Shell again suspended production on its 3.6 mtpa Prelude floating LNG producer offshore Western Australia due to a fire.

Shell, which is now led by Wael Sawan, also said that it expects “significantly lower” results for its chemicals and product business as well as lower results for its marketing business compared to the prior quarter.

Moreover, Shell expects to pay about $2 billion in additional 2022 taxes related to the EU and British windfall taxes imposed on the energy sector.

“These impacts will be reported as identified items and therefore will not impact Q4’22 adjusted earnings and will have limited cash impact in Q4’22 given the expected timing of payments,” the firm said.

Shell’s adjusted earnings reached $9.45 billion in the third quarter, a jump when compared to $4.13 billion in the year before. Adjusted earnings dropped from record $11.47 billion in the prior quarter.

The company’s income dropped compared the prior quarter mainly due to lower LNG trading and optimization results, lower chemicals and refining margins, as well as higher underlying operating expenses.

Also, the company’s Integrated Gas segment earned $5.73 billion in the third quarter, compared to a loss of $131 million in the same period a year ago and $8.10 billion in the prior quarter.

During the January-September period, Shell sold 49.16 million tonnes of LNG, a rise of 4 percent year-on-year while liquefaction volumes dropped 1 percent to 22.90 million tonnes.

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