Shell's Q1 profits almost treble y-o-y, takes $3.9 billion Russia hit
Quantum Commodity Intelligence - Energy major Shell said it booked $9.1 billion of earnings in the first quarter of the year, up 43% on the previous quarter and nearly treble the profit made in Q1 2021 as soaring oil prices and strong refining margins meant it was the best quarter for 14 years for the London-listed company.
The $9.1 billion figure compares with $6.4 billion in Q4 2021 and $3.23 billion a year earlier, leaving the company to meet its commitment to increase dividends by 4% and ramp up its share buyback scheme.
The oil and gas major's results come amid crude and gas prices that have hit multi-year or record highs amid rising demand, sluggish supply and Russia's invasion of Ukraine, dynamics that have seen other majors post surging profits.
Earnings from refining rocketed to $1.17 billion in the quarter compared with a loss of $130 million in Q4 and a profit of $781 million in Q1 2021 as its global indicative refining margin jumped 40% from $7/bbl in Q4 to $10/bbl in Q1, largely driven by high distillate crack spreads.
The stellar results come after the company took a post-tax charge of $3.9 billion as a result of withdrawing from its operations in Russia.
Russia
It had previously stated it expected to take a charge of $4-5 billion on withdrawing from its operations in the country, which included a $1.126 billion writedown on its loan to the Nordstream 2 gas pipeline project and a $1.6 billion writedown in profit from its investment in Sakhalin 2.
The company said it has stopped all spot purchases of Russian crude, LNG and cargoes of refined products directly exported from Russia and would not renew long-term contracts for oil unless forced to do so by governments.
It added it was still offtaking crude under long-term contracts signed before the invasion, but that, alongside all term contracts to lift oil products, would finish by year-end.
"By the end of this year, all of Shell's long-term 3rd party purchases of Russian crude will stop, except for two contracts with a small, independent Russian producer," the company said, without naming the producer.
Shell said it would still fulfil long-term contractual commitments to lift LNG as: "Reducing European reliance on piped natural gas supplies from Russia is also a very complex challenge that requires concerted action by governments, as well as energy suppliers and customers."
The EU Commission has proposed to stop buying Russian crude within six months and oil products by the end of the year in a bid to choke the country's revenue and pressure it to withdraw from Ukraine.
