London — Royal Dutch Shell says it will write down the value of oil and gas assets by $3.5bn-$4.5bn after a string of impairments in 2020 as it adjusts to a weaker outlook.

In an update on December 21 ahead of its fourth-quarter results on February 4, Shell said the posttax charge was due in part to impairments on its Appomattox field in the US Gulf of Mexico, the closure of refineries and liquefied natural gas (LNG) contracts.

It said some charges involved in its restructuring will be recognised in 2021.

Shell shares were down by about 4% in early trading in London.

In October, Shell, the world’s biggest LNG trader, wrote down the value of its LNG portfolio by just under $1bn, focusing on its flagship Prelude project in Australia. That followed a $16.8 bn writedown in the second quarter which also included Prelude and a sharp cut in its price outlook.

On February 11 CEO Ben van Beurden is due to unveil Shell’s long-term strategy to sharply reduce its greenhouse gas emissions and expand its low-carbon energy and power businesses.

In its update, the Anglo-Dutch company also said it expects oil and gas production in its upstream division to be around 2.275-million to 2.350-million barrels of oil equivalent per day, slightly higher than in the third quarter.

Production was affected by the closure of platforms in the Gulf of Mexico due to hurricanes as well as mild weather in Northern Europe.

LNG liquefaction volumes are expected to be between 8-million and 8.6-million tonnes.

Oil refinery utilisation is expected to be 72%-76% of capacity in the quarter, reflecting continued weak demand due to the coronavirus pandemic.

Shell, the world’s largest retailer, said its fuel sales are expected to be in a range of 4-million to 5-million barrels per day, roughly similar to the third quarter.

Record profits from its marketing business, which includes more than 45,000 petrol stations, strongly boosted Shell’s third-quarter results. The company said, however, that its fourth-quarter marketing results are expected to be “significantly lower” than the previous quarter.

Oil and gas trading profits are also set to decline sharply in the fourth quarter from the third quarter, it said.


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